Esquire Financial Holdings, Inc.
For the period ended Jun 30, 2025. Filed Aug 8, 2025.
View on SEC.govAbout this filing
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, 2025 · Filed Aug 8, 2025
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 2025-03-31; filed 2025-05-12.
0001558370-25-007325
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-08.
0001558370-25-010928
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 91 previous paragraphs and 108 current paragraphs.
51 unchanged; 33 reworded; 17 added; 7 removed; 0 previous and 7 current paragraphs rearranged.
Tables are not compared: 50 previous and 50 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 (17)
Current report
Recent Developments. On July 4, 2025, the President signed H.R. 1, the “One Big Beautiful Bill Act,” (“The Act”) into law. The legislation includes several changes to federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in 2025, including the restoration of immediate expensing of domestic research and development (“R&D”) expenditures, reinstatement of 100% bonus depreciation, and more favorable rules for determining the limitation on business interest expense. The Act also made certain changes to the deductibility of the cost
Current report
of meals and charitable contributions that are effective for tax years beginning after December 31, 2025. These changes were not reflected in the income tax provision for the three and six months ended June 30, 2025, as enactment occurred after the balance sheet date. The Company is currently evaluating the impact on future periods.
Current report
Debt Securities Portfolio. Securities available-for-sale increased $15.6 million, or 6.5%, to $257.4 million at June 30, 2025 from $241.7 million at December 31, 2024, due to securities purchases of $31.1 million at current market interest rates and decreases in unrealized losses of $4.8 million, offset by securities paydowns of $20.1 million. Securities held-to-maturity decreased $4.2 million, or 6.1%, to $64.5 million at June 30, 2025 from $68.7 million at December 31, 2024, driven by paydowns of $4.1 million.
Current report
From a credit risk management perspective, the combined multifamily and CRE portfolio, excluding nonaccrual loans, totaled $449.6 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, 2025 divided by appraised value at origination) of approximately 1.58 and 55%, respectively. When further evaluating this population, loans maturing in (1) less than one year totaled $79.4 million and had a current weighted average DSCR and an original LTV of approximately 1.25 and 62%, respectively; and (2) one to two years totaled $59.8 million and had a current weighted average DSCR and an original LTV of approximately 1.39 and 66%, respectively.
Current report
Our net interest margin of 6.03% decreased 16 basis points from the comparable period in 2024 primarily due to a $64.9 million increase in average interest earning cash balances to $151.9 million in the current quarter coupled with decreases in short-term market interest rates on these elevated balances. Average loan yields increased 4 basis points to 7.89% while average loans increased $221.8 million, or 17.9%, to $1.46 billion, primarily due to commercial loan growth of $211.3 million, or 27.5%, focused in our higher yielding law firm commercial loans. Average securities increased $79.6 million, or 31.4%, to $333.0 million as management elected to ratably purchase short duration agency mortgage-backed securities throughout 2024, in light of tempering commercial real estate growth, at commensurate risk adjusted yields. Average deposits increased $335.7 million, or 23.8%, to $1.75 billion, led by increases in escrow or IOLTA, money market (both commercial and personal) deposits and noninterest bearing demand deposits totaling $204.4 million, $114.8 million, and $62.7 million, respectively, when comparing the current quarter to the comparable quarter in 2024. Our cost of deposits, including noninterest bearing demand deposits, increased 11 basis points to 0.98% due to changes in deposit composition coupled with increases in short-term money market rates.
Current report
Loan interest income increased $4.5 million, or 18.8%, to $28.8 million for the three months ended June 30, 2025 from $24.2 million for the three months ended June 30, 2024. This increase was attributable to a $221.8 million, or 17.9%, increase in the average loan balance primarily due to growth in our higher yielding national litigation related loans totaling $227.3 million, or 34.8%, increasing total loan yields by 4 basis points to 7.89%. Overall, the commercial loan portfolio average balance increased $211.3 million to $980.5 million, driving commercial loan yields to 9.41%.
Current report
Securities interest income increased $1.1 million, or 54.6%, to $3.1 million in the current quarter with $720 thousand attributable to average volume increases and $384 thousand attributable to increases in average rate. Average securities increased $79.6 million, or 31.4%, to $333.0 million as management elected to ratably purchase short duration agency mortgage-backed securities throughout 2024, in light of tempering commercial real estate growth, at commensurate risk adjusted yields.
Current report
Income on interest earning cash increased $501 thousand to $1.6 million for the three months ended June 30, 2025 with $736 thousand attributable to average volume increases (funded with core deposits) offset by $235 thousand due to decreases in short-term rates. Average interest earning cash balances increased $64.9 million, or 74.6%, to $151.9 million, negatively impacting our net interest margin as compared to the comparable period in 2024.
Current report
General. Net income increased $2.8 million, or 13.4%, to $23.3 million for the six months ended June 30, 2025 from $20.5 million for the six months ended June 30, 2024. The increase resulted from a $9.7 million increase in net interest income, partially offset by a $4.0 million increase in noninterest expense and a $3.0 million increase in the provision for credit losses.
Current report
Net Interest Income. Net interest income increased $9.7 million, or 20.5%, to $56.9 million for the six months ended June 30, 2025 from $47.2 million for the six months ended June 30, 2024, due to a $11.6 million increase in interest income, partially offset by a $1.9 million increase in interest expense.
Current report
Our net interest margin of 5.99% decreased 14 basis points from the comparable period in 2024 primarily due to a $69.4 million increase in average interest earning cash balances to $153.8 million for the current period coupled with decreases in short-term market interest rates on these elevated balances. Average loan yields increased 2 basis points to 7.84% while average loans increased $204.2 million, or 16.7%, to $1.43 billion, primarily due to commercial loan growth of $199.6 million, or 26.5%, focused in our higher yielding law firm commercial loans. Average securities increased $90.7 million, or 37.8%, to $330.4 million as management elected to ratably purchase short duration agency mortgage-backed securities throughout 2024, in light of tempering commercial real estate growth, at commensurate risk adjusted yields. Average deposits increased $334.0 million, or 24.2%, to $1.71 billion, led by increases in escrow or IOLTA, money market (both commercial and personal) deposits and noninterest bearing demand deposits totaling $232.0 million, $99.9 million, and $60.5 million, respectively, when comparing the current period to the comparable period in 2024. Our cost of deposits, including noninterest bearing demand deposits, increased 5 basis points to 0.96% due to changes in deposit composition coupled with increases in short-term money market rates.
Current report
Loan interest income increased $8.0 million, or 16.7%, to $55.6 million for the six months ended June 30, 2025 from $47.6 million for the six months ended June 30, 2024. This increase was attributable to a $204.2 million, or 16.7%, increase in the average loan balance primarily due to growth in our higher yielding national litigation related loans totaling $221.4 million, or 34.9%, increasing loan yields by 2 basis points to 7.84%. Overall, the commercial loan portfolio average balance increased $199.6 million to $951.7 million, driving commercial loan yields to 9.41% for the six months ended June 30, 2025.
Current report
Securities interest income increased $2.5 million, or 70.0%, to $6.2 million for the six months ended June 30, 2025 with $1.6 million attributable to average volume increases and $980 thousand attributable to increases in average rate. Average securities increased $90.7 million, or 37.8%, to $330.4 million as management elected to ratably purchase short duration agency mortgage-backed securities throughout 2024, in light of tempering commercial real estate growth, at commensurate risk adjusted yields.
Current report
Income on interest earning cash increased $1.1 million to $3.3 million for the six months ended June 30, 2025 with $1.5 million attributable to average volume increases (funded with core deposits), offset by $466 thousand due to decreases in short-term rates. Average interest earning cash balances increased $69.4 million, or 82.3%, to $153.8 million, negatively impacting our net interest margin as compared to the comparable period in 2024.
Current report
Interest Expense. Interest expense increased $1.9 million, or 30.5%, to $8.2 million for the six months ended June 30, 2025 from $6.3 million for the six months ended June 30, 2024, with $1.8 million attributable to increases in average deposit balances (primarily IOLTA and money market) and $77 thousand attributable to increases in short-term rates (primarily money market). Average deposits increased $334.0 million, or 24.2%, to $1.71 billion, led by increases in escrow or IOLTA, money market (both commercial and personal) deposits and noninterest bearing demand deposits totaling $232.0 million, $99.9 million, and $60.5 million, respectively, when comparing the six months ended June 30, 2025 to the prior year period.
Current report
Provision for Credit Losses. Our provision for credit losses was $5.0 million for the six months ended June 30, 2025, an increase of $3.0 million from the $2.0 million provision for the six months ended June 30, 2024. This increase was primarily driven by $6.2 million in charge-offs consisting of a small business merchant related commercial loan totaling $3.3 million (currently on nonaccrual for $736 thousand and previously classified as special mention) and a $2.9 million charge-off in the first quarter of 2025 on an $8.0 million nonaccrual multifamily loan. As of June 30, 2025, our allowance to loans ratio was 1.30% as compared to 1.47% as of June 30, 2024. Based on management’s evaluation of current credit risk in our loan portfolio (with a focus on multifamily and commercial loans) as well as increases in the general reserve considering loan growth, loan composition, and the current uncertain economic and short-term interest rate environment (including, but not limited to, its potential impact on the New York metro multifamily real estate market), management believes the allowance for credit losses is adequate at June 30, 2025.
Current report
Income Tax Expense. We recorded income tax expense of $7.5 million for the six months ended June 30, 2025, reflecting an effective tax rate of 24.3%, compared to $7.5 million, or 26.8%, for the six months ended June 30, 2024. The decrease in the effective tax rate resulted from certain discrete tax benefits related to share-based compensation, specifically the exercise of stock options.
Removed paragraphs (7)
Previous report
Debt Securities Portfolio. Securities available-for-sale decreased $4.8 million, or 2.0%, to $236.9 million at March 31, 2025 from $241.7 million at December 31, 2024, due to paydowns of $8.5 million, offset by unrealized gains
Previous report
of $3.8 million. Securities held-to-maturity decreased $1.9 million, or 2.8%, to $66.7 million at March 31, 2025 from $68.7 million at December 31, 2024, driven by paydowns of $1.9 million and net premium amortization of $25 thousand.
Previous report
The following is a brief summary of our risk management results for our multifamily and CRE portfolios as of March 31, 2025:
Previous report
Our net interest margin of 5.96% decreased 10 basis points, driven by the change in composition of our average interest earning assets (primarily securities and interest earning cash balances) funded with low-cost core deposits as well as decreases in short-term market interest rates. Average loan yields increased 2 basis points to 7.80% while average loans increased $186.2 million, or 15.4%, to $1.39 billion. Average securities increased $101.7 million, or 45.0%, to $327.8 million as management elected to ratably purchase short duration agency mortgage-backed securities throughout 2024, in light of tempering commercial real estate growth, which increased the portfolio’s yield by 91 basis points to 3.76%. Average interest bearing deposit balances (primarily IOLTA) increased $273.9 million, or 31.8%, when compared to March 31, 2024 where our deposit cost-of-funds, excluding demand deposits, decreased 10 basis points to 1.38% due to increases in low-cost IOLTA deposits. Due to our significant deposit growth, average interest earning cash balances, a lower yielding asset category at 4.32%, remained elevated at $155.8 million, negatively impacting our net interest margin, despite our success in deploying excess cash into higher yielding commercial loans and securities on a linked quarter basis.
Previous report
Loan interest income increased $3.4 million, or 14.6%, to $26.8 million for the three months ended March 31, 2025 from $23.4 million for the three months ended March 31, 2024. This increase was attributable to a $186.2 million, or 15.4%, increase in the average loan balance due to growth in our higher yielding national litigation lending platform that grew $187.5 million, or 25.5%, and a 2 basis point increase in loan yields to 7.80%. Our loan platform growth (primarily commercial) drove a $3.4 million increase in interest income, all of which was due to increased volume while our loan yields remained consistent. The commercial loan portfolio yield for the quarter ended March 31, 2025 was 9.40%.
Previous report
Securities interest income increased $1.4 million, or 89.5%, to $3.0 million for the three months ended March 31, 2025 from $1.6 million for the three months ended March 31, 2024, driven by purchases of short duration agency mortgage-backed securities throughout 2024. Average securities increased $101.7 million, or 44.9%, to $327.8 million as management elected to ratably purchase short duration agency mortgage-backed securities throughout 2024, in light of tempering commercial real estate growth, at commensurate risk adjusted yields. Securities interest income increased by $1.4 million with $841 thousand attributable to average volume increases and $596 thousand attributable to increases in average rate as new positions were acquired at a market rate higher than the blended rate of the legacy portfolio.
Previous report
Interest earning cash interest income increased $582 thousand to $1.7 million for the three months ended March 31, 2025 from $1.1 million for the three months ended March 31, 2024, attributable to a $74.0 million, or 90.6%, increase in the average balance of interest earning cash. Average interest earning cash balances, a lower yielding asset category, remained elevated at $155.8 million, negatively impacting our net interest margin, despite our success in deploying excess cash into higher yielding commercial loans and securities on a linked quarter basis. Interest earning cash income increased by $582 thousand with $813 thousand attributable to average volume increases, offset by a $231 thousand decrease attributable to decreases in short term rates.
Reworded paragraphs (33)
Previous wording
Management’s discussion and analysis of financial condition at March 31, 2025 and December 31, 2024 and results of operations for the three months ended March 31, 2025 and 2024 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, 2024.
Current wording
Management’s discussion and analysis of financial condition at June 30, 2025 and December 31, 2024 and results of operations for the three and six months ended June 30, 2025 and 2024 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, 2024.
Previous wording
On January 1, 2023, we adopted the CECL Standard. The Company is required under the CECL Standard to estimate and record lifetime credit losses expected to be incurred on such financial instruments over the entire contractual term at the time they are recorded in the financial statements, such as with the funding or purchasing of a loan, or a
Current wording
The Company is required under the CECL Standard to estimate and record lifetime credit losses expected to be incurred on such financial instruments over the entire contractual term at the time they are recorded in the financial
Previous wording
commitment to lend unless the commitment is unconditionally cancellable. Because this allowance methodology follows a forward-looking lifetime expected loss approach, it is not necessary for a loss event to have been incurred before a credit loss is recognized. The estimation process in determining an appropriate level for the allowance for credit losses requires consideration of past events, current conditions, and reasonable and supportable forecasts, and involves a significant degree of management judgment. The Company determines the allowance for credit losses using methods it believes are appropriate given the characteristics of each loan portfolio and applies these methods consistently over time.
Current wording
statements, such as with the funding or purchasing of a loan, or a commitment to lend unless the commitment is unconditionally cancellable. Because this allowance methodology follows a forward-looking lifetime expected loss approach, it is not necessary for a loss event to have been incurred before a credit loss is recognized. The estimation process in determining an appropriate level for the allowance for credit losses requires consideration of past events, current conditions, and reasonable and supportable forecasts, and involves a significant degree of management judgment. The Company determines the allowance for credit losses using methods it believes are appropriate given the characteristics of each loan portfolio and applies these methods consistently over time.
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
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
Previous wording
basis of the financial asset. As of March 31, 2025, there was one multifamily loan totaling $8.0 million that was individually analyzed and collateral dependent on the Consolidated Statements of Financial Condition.
Current wording
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, 2025, there was one collateral dependent multifamily loan secured by real estate totaling $8.0 million that was individually analyzed and one collateral dependent commercial loan secured by business assets totaling $736 thousand that was individually analyzed, with no associated specific reserve on either loan on the Consolidated Statements of Financial Condition.
Previous wording
We currently have lending clients in 31 states and our larger markets include California, New York, Texas, Florida, Pennsylvania, Michigan, South Carolina and New Jersey. 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
Current wording
We currently have lending clients in 32 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,
Previous wording
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 9.5% variable rate asset yield on these commercial loans for the quarter ended March 31, 2025. 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 $1.50 of low-cost (our cost of funds for the quarter ended March 31, 2025 is 94 basis points) 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 this 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 $961.4 million, or 57%, of total deposits at March 31, 2025. 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 commercial litigation funds of $468.8 million at March 31, 2025, makes this litigation vertical a highly desirable core low-cost funding platform fueling bank-wide growth.
Current wording
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 9.5% variable rate asset yield on these commercial loans for the quarter ended June 30, 2025. 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 $1.43 of low-cost (our cost of funds for the quarter ended June 30, 2025 is 98 basis points) 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 $944.4 million, or 53%, of total deposits at June 30, 2025. 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 commercial litigation funds of $373 million at June 30, 2025, 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 11% on a compound annual growth rate from 2020 to 2024 with payment volumes or TAM of $11.6 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 technology to ensure card brand and regulatory compliance, support multiple processing platforms, manage daily risk across approximately 90,000 small business merchants in all 50 states, and perform commercial treasury clearing services for approximately $9 billion in credit and debit card processing volume across 140 million transactions in the quarter ended March 31, 2025.
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 11% on a compound annual growth rate from 2020 to 2024 with payment volumes or TAM of $11.6 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 technology to ensure card brand and regulatory compliance, support multiple processing platforms, manage daily risk across approximately 92,000 small business merchants in all 50 states, and perform commercial treasury clearing services for approximately $10 billion in credit and debit card processing volume across 153 million transactions in the quarter ended June 30, 2025.
Previous wording
The success of our national litigation and payment processing verticals coupled with our focus on branchless technology has led to industry leading performance. For the quarter ended March 31, 2025, we have produced industry leading returns including, but not limited to, an average return on assets and equity of 2.39% and 19.13%, respectively; industry leading net interest margin of 5.96%; strong efficiency ratio of 49.6%; and a diversified revenue stream as demonstrated by a strong net interest margin and stable fee income representing 18% of total revenue (our payment processing vertical has a compound annual growth rate of 14% since 2020). Coupling these performance metrics with strong balance sheet management including, but not limited to, loan portfolio diversification, an asset sensitive balance sheet with approximately 66% 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 $1.11 billion, or 66% of deposits, 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 branchless technology has led to industry leading performance. For the quarter ended June 30, 2025, we have produced industry leading returns including, but not limited to, an average return on assets and equity of 2.37% and 18.74%, respectively; industry leading net interest margin of 6.03%; strong efficiency ratio of 47.6%; and a diversified revenue stream as demonstrated by a strong net interest margin and stable fee income representing 17% of total revenue (our payment processing vertical has a compound annual growth rate of 14% since 2020). Coupling these performance metrics with strong balance sheet management including, but not limited to, loan portfolio diversification, an asset sensitive balance sheet with approximately 68% 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 $1.04 billion, or 58% of deposits, with no outstanding borrowings, positions our Company for future growth and success.
Previous wording
Assets. Our total assets were $1.95 billion at March 31, 2025, an increase of $61.9 million, or 3.3%, from $1.89 billion at December 31, 2024, due to increases in cash and cash equivalents of $46.7 million, or 37.0%, growth in loans held for investment of $18.8 million, or 1.3%, partially offset by a decrease in securities available-for-sale of $4.8 million, or 2.0%.
Current wording
Assets. Our total assets were $2.06 billion at June 30, 2025, an increase of $167.5 million, or 8.8%, from $1.89 billion at December 31, 2024, due to growth in loans held for investment of $97.6 million, or 7.0%, increases in cash and cash equivalents of $36.6 million, or 29.0%, and increases in securities available-for-sale of $15.6 million, or 6.5%.
Previous wording
Loan Portfolio Analysis. At March 31, 2025, loans, net of deferred fees and unearned premiums, were $1.42 billion, or 83.9% of total deposits, compared to $1.40 billion, or 85.1% of total deposits, at December 31, 2024. The growth in loans was primarily driven by net production in commercial loans and multifamily loans. Commercial loans increased $13.6 million, or 1.5%, to $934.1 million at March 31, 2025 from $920.6 million at December 31, 2024. Multifamily loans increased $9.7 million, or 2.7%, to $364.9 million at March 31, 2025 from $355.2 million at December 31, 2024.
Current wording
Loan Portfolio Analysis. At June 30, 2025, loans, net of deferred fees and unearned premiums, were $1.49 billion, or 83.9% of total deposits, compared to $1.40 billion, or 85.1% of total deposits, at December 31, 2024. The growth in loans was primarily driven by net production in commercial loans and to a lesser extent, multifamily loans. Commercial loans increased $87.3 million, or 9.5%, to $1.01 billion at June 30, 2025 from $920.6 million at December 31, 2024. Multifamily loans increased $11.3 million, or 3.2%, to $366.4 million at June 30, 2025 from $355.2 million at December 31, 2024.
Previous wording
At March 31, 2025, our Litigation-Related loans, which include commercial and consumer lending to attorneys, law firms and plaintiffs/claimants, totaled $838.0 million, or 59.2% of our total loan portfolio, compared to $838.6 million, or 60.0% of our total loan portfolio at December 31, 2024. We also had Commercial Litigation-Related committed and uncommitted undrawn lines of credit totaling $90.7 million and $680.6 million, respectively, at March 31, 2025.
Current wording
At June 30, 2025, our Litigation-Related loans, which include commercial and consumer lending to attorneys, law firms and plaintiffs/claimants, totaled $921.4 million, or 61.5% of our total loan portfolio, compared to $838.6 million, or 60.0% of our total loan portfolio at December 31, 2024. We also had Commercial Litigation-Related committed and uncommitted undrawn lines of credit totaling $81.4 million and $748.8 million, respectively, at June 30, 2025.
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Litigation-Related post-settlement consumer loans decreased $94 thousand to $2.6 million as of March 31, 2025, from $2.7 million as of December 31, 2024.
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Litigation-Related post-settlement consumer loans increased $243 thousand to $3.0 million as of June 30, 2025, from $2.7 million as of December 31, 2024.
Previous wording
Funding**.** Total deposits increased $45.9 million, or 2.8%, to $1.69 billion at March 31, 2025 from $1.64 billion at December 31, 2024. We continue to focus on the acquisition and expansion of core deposit relationships. Core deposits, which we define as total deposits excluding time deposits, totaled $1.68 billion at March 31, 2025, or 99.6% of total deposits, compared to $1.63 billion or 99.1% of total deposits at December 31, 2024. Litigation and payment processing deposits represent $1.42 billion, or 84.1%, of total deposits at March 31, 2025. Savings, NOW and money market deposits increased $28.6 million, or 2.5%, to $1.16 billion at March 31, 2025.
Current wording
Funding**.** Total deposits increased $140.1 million, or 8.5%, to $1.78 billion at June 30, 2025 from $1.64 billion at December 31, 2024, primarily due to our focus on client acquisition and expansion/growth in our national litigation platform. Core deposits, which we define as total deposits excluding time deposits, totaled $1.78 billion at June 30, 2025, or 99.7% of total deposits, compared to $1.63 billion or 99.1% of total deposits at December 31, 2024. Litigation and payment processing deposits represent $1.49 billion, or 83.5%, of total deposits at June 30, 2025. Savings, NOW and money market deposits increased $78.9 million, or 7.0%, to $1.21 billion and noninterest bearing demand deposits increased $69.2 million, or 13.9%, to $567.2 million at June 30, 2025.
Previous wording
Core commercial relationship banking clients in our two national verticals represent approximately 80% of our $1.69 billion deposit base at March 31, 2025. 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 $961.4 million, or 57.0%, of total deposits. As of March 31, 2025, uninsured deposits were $525.6 million, or 31%, of our total deposits of $1.69 billion, excluding $11.3 million of affiliate deposits held at the Bank. Approximately 80% 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 $1.78 billion deposit base at June 30, 2025. 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 $944.4 million, or 53.0%, of total deposits. As of June 30, 2025, uninsured deposits were $561.0 million, or 31%, of our total deposits of $1.78 billion, excluding $14.1 million of affiliate deposits held at the Bank. Approximately 75% 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.
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, 2025, off-balance sheet sweep funds totaled approximately $468.8 million, of which approximately $442.8 million, or 94.5%, 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, 2025, off-balance sheet sweep funds totaled approximately $373.1 million, of which approximately $349.7 million, or 93.7%, 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.
Previous wording
At March 31, 2025, we had the ability to borrow, on a secured basis, up to $429.6 million from the Federal Home Loan Bank of New York and $50.8 million from the Federal Reserve Bank of New York discount window. At March 31, 2025, we also had $17.5 million in aggregate unsecured lines of credit with unaffiliated correspondent banks. No borrowing amounts were outstanding during the first quarter of 2025. 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, 2025, we had the ability to borrow, on a secured basis, up to $456.1 million from the Federal Home Loan Bank of New York and $49.8 million from the Federal Reserve Bank of New York discount window. At June 30, 2025, we also had $17.5 million in aggregate unsecured lines of credit with unaffiliated correspondent banks. No borrowing amounts were outstanding during the second quarter of 2025. 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 $13.6 million to $250.7 million at March 31, 2025, from $237.1 million at December 31, 2024, primarily due to net income of $11.4 million and other comprehensive income of $2.6 million, as unrealized losses on our securities available-for-sale declined due to current short-term market interest rates, and amortization of share-based compensation of $1.1 million, partially offset by dividends declared to common stockholders of $1.5 million.
Current wording
Stockholders’ Equity. Total stockholders’ equity increased $26.5 million to $263.6 million at June 30, 2025, from $237.1 million at December 31, 2024, primarily due to net income of $23.3 million and other comprehensive income of $3.4 million, as unrealized losses on our securities available-for-sale declined due to current short-term market interest rates, and amortization of share-based compensation of $2.3 million, partially offset by dividends declared to common stockholders of $3.0 million.
Previous wording
Asset Quality. Nonperforming assets consisted of one multifamily loan totaling $8.0 million as of March 31, 2025 and $10.9 million as of December 31, 2024. We had no exposure to commercial office space, no construction loans, and $14.5 million in performing loans to the hospitality industry. The allowance for credit losses was $19.5 million, or 1.37% of total loans, as of March 31, 2025, as compared to $21.0 million, or 1.50% of total loans at December 31, 2024. Effective March 31, 2025, a $2.9 million charge-off on the one nonperforming multifamily loan was recognized based on our proposed restructuring of this credit with the borrower in April 2025. We anticipate that this restructuring will be completed in the second quarter of 2025 with the goal of returning this nonperforming credit facility to performing status, based on future sustained performance metrics, in the latter part of 2025. The decrease in the allowance as a percentage of loans was a result of management’s revaluation of credit risk in our multifamily portfolio subsequent to a $2.9 million charge-off recognized, 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 including, but not limited to, its potential impact on the New York metro multifamily and commercial real estate market. At March 31, 2025, special mention and
Current wording
Asset Quality. Nonperforming assets totaled $8.7 million as of June 30, 2025, and consisted of one multifamily loan totaling $8.0 million and one commercial loan totaling $736 thousand. Nonperforming assets totaled $10.9 million as of December 31, 2024. We had no exposure to commercial office space, no construction loans, and $14.4 million in performing loans to the hospitality industry. The allowance for credit losses was $19.4 million, or 1.30% of total loans, as of June 30, 2025, as compared to $21.0 million, or 1.50% of total loans at December 31, 2024. During the current quarter, a $736 thousand commercial loan, net of a $3.3 million charge-off, was placed on nonaccrual and classified as substandard (previously reported as special mention in prior periods) due to further deterioration of its business performance. This commercial loan, made to a small business merchant, is uncorrelated to our primary commercial litigation lending platform and other commercial loans. Based on management’s evaluation of current credit risk in our loan portfolio (with a focus on multifamily and commercial loans) as well as increases in the general reserve considering loan growth, loan composition, and the current uncertain economic and short-term interest rate environment (including, but not limited to, its potential impact on the New York metro multifamily real estate market), management believes the allowance for credit losses is adequate at June 30, 2025.
Previous wording
substandard loans totaled $4.0 million and $8.0 million, respectively, compared to $4.0 million and $10.9 million, respectively, as of December 31, 2024. The ratio of nonperforming loans to total loans and total assets was 0.57% and 0.41%, respectively, as of March 31, 2025, as compared to 0.78% and 0.58%, respectively, as of December 31, 2024. The allowance for credit losses to the nonperforming loans was 243% as of March 31, 2025, as compared to 192% as of December 31, 2024.
Current wording
At June 30, 2025, special mention and substandard loans totaled $22.0 million and $8.7 million, respectively, compared to $4.0 million and $10.9 million, respectively, as of December 31, 2024. The $18.0 million increase in special mention balances primarily relates to two law firm related commercial loans totaling $15.7 million and a $6.1 million multifamily loan (to the same sponsor as the $8.0 million nonaccrual substandard loan), offset by the aforementioned merchant related commercial loan totaling $736 thousand that migrated to nonaccrual/substandard during the current quarter. The ratio of nonperforming loans to total loans and total assets was 0.58% and 0.42%, respectively, as of June 30, 2025, as compared to 0.78% and 0.58%, respectively, as of December 31, 2024. The allowance for credit losses to the nonperforming loans was 222% as of June 30, 2025, as compared to 192% as of December 31, 2024.
Previous wording
General. Net income increased $1.3 million, or 13.4%, to $11.4 million for the three months ended March 31, 2025 from $10.1 million for the three months ended March 31, 2024. The increase resulted from a $4.7 million increase in net interest income, partially offset by an increase of $2.2 million in noninterest expense and a decrease of $238 thousand in noninterest income.
Current wording
General. Net income increased $1.4 million, or 13.4%, to $11.9 million for the three months ended June 30, 2025 from $10.5 million for the three months ended June 30, 2024. The increase resulted from a $4.9 million increase in net interest income, and a $302 thousand increase in noninterest income, partially offset by $2.5 million increase in the provision for credit losses and a $1.8 million increase in noninterest expense.
Previous wording
Net Interest Income. Net interest income increased $4.7 million, or 20.8%, to $27.6 million for the three months ended March 31, 2025 from $22.9 million for the three months ended March 31, 2024, due to a $5.4 million increase in interest income, partially offset by a $694 thousand increase in interest expense.
Current wording
Net Interest Income. Net interest income increased $4.9 million, or 20.3%, to $29.3 million for the three months ended June 30, 2025 from $24.3 million for the three months ended June 30, 2024, due to a $6.2 million increase in interest income, partially offset by a $1.2 million increase in interest expense.
Previous wording
Interest Income. Interest income increased $5.4 million, or 20.9%, to $31.5 million for the three months ended March 31, 2025 from $26.1 million for the three months ended March 31, 2024 and was attributable to increases in loan, securities and interest earning cash and other interest income. Throughout 2024, management tempered multifamily and
Current wording
Interest Income. Interest income increased $6.2 million, or 22.5%, to $33.5 million for the three months ended June 30, 2025 from $27.4 million for the three months ended June 30, 2024 and was attributable to increases in income on
Previous wording
commercial real estate loan growth in response to the economic environment, replacing the growth with the purchases of short duration agency mortgage-backed securities. This decision further enhanced our liquidity profile and improved our securities to asset ratio to approximately 16% at March 31, 2025 from 13% at March 31, 2024.
Current wording
loans, securities and interest earning cash. Throughout 2024, management tempered multifamily and commercial real estate loan growth in response to the economic environment, replacing the growth with the purchases of short duration agency mortgage-backed securities. This decision further enhanced our liquidity profile and improved our securities to asset ratio to approximately 16% in the current quarter.
Previous wording
Interest Expense. Interest expense increased $694 thousand, or 21.6%, to $3.9 million for the three months ended March 31, 2025 from $3.2 million for the three months ended March 31, 2024, attributable to increases in average deposit balances (primarily IOLTA) comprising $901 thousand of the interest expense movement, offset by a decrease of $207 thousand attributable to deposit product composition. Average deposits increased $331.9 million, or 24.6%, to $1.68 billion, led by increases in escrow or IOLTA, noninterest bearing demand, and money market (both commercial and personal) deposits totaling $259.6 million, $58.2 million, and $17.9 million, respectively, when comparing the three months ended March 31, 2025 to the prior year period.
Current wording
Interest Expense. Interest expense increased $1.2 million, or 39.8%, to $4.3 million for the three months ended June 30, 2025 from $3.1 million for the three months ended June 30, 2024, with $935 thousand attributable to increases in average deposit balances (primarily IOLTA and money market) and $284 thousand attributable to increases in short-term rates (primarily money market). Average deposits increased $335.7 million, or 23.8%, to $1.75 billion, led by increases in escrow or IOLTA, money market (both commercial and personal) deposits and noninterest bearing demand deposits totaling $204.4 million, $114.8 million, and $62.7 million, respectively, when comparing the three months ended June 30, 2025 to the prior year period.
Previous wording
Provision for Credit Losses. Our provision for credit losses was $1.5 million for the three months ended March 31, 2025, an increase of $500 thousand from the $1.0 million provision for the three months ended March 31, 2024. As of March 31, 2025, our allowance to loans ratio was 1.37% as compared to 1.43% as of March 31, 2024. The decrease in the allowance as a percentage of loans was a result of management’s revaluation of credit risk in our multifamily portfolio subsequent to a $2.9 million charge-off recognized, 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 including, but not limited to, its potential impact on the New York metro multifamily and commercial real estate market.
Current wording
Provision for Credit Losses. Our provision for credit losses was $3.5 million for the three months ended June 30, 2025, an increase of $2.5 million from the $1.0 million provision for the three months ended June 30, 2024. The increase was primarily driven by a $3.3 million charge-off on a small business merchant related commercial loan that was placed on nonaccrual totaling $736 thousand. This nonaccrual loan was previously reported as special mention in prior periods. As of June 30, 2025, our allowance to loans ratio was 1.30% as compared to 1.47% as of June 30, 2024. Based on management’s evaluation of current credit risk in our loan portfolio (with a focus on multifamily and commercial loans) as well as increases in the general reserve considering loan growth, loan composition, and the current uncertain economic and short-term interest rate environment (including, but not limited to, its potential impact on the New York metro multifamily real estate market), management believes the allowance for credit losses is adequate at June 30, 2025.
Previous wording
Payment processing income was $4.9 million for the quarter ended March 31, 2025, a $384 thousand decrease from the same period in 2024, primarily due to changes in our overall merchant risk profile and composition. Payment processing volumes for the credit and debit card processing platform increased $673.3 million, or 7.8%, to $9.3 billion and transactions decreased 10.1 million, or 6.7%, to 140.4 million for the quarter ended March 31, 2025, as compared to the same period in 2024. We continue to focus on the expansion of sales channels through ISOs, prudently managing risk while focusing on new merchant originations, increasing overall volumes, and 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, supports multiple processing platforms, manages daily risk across 90,000 small business merchants in all 50 states, and performs commercial treasury clearing services for $9.3 billion in volume across 140.4 million in transactions in the quarter ended March 31, 2025. ASP fee income increased $134 thousand to $880 thousand for the first quarter of 2025. ASP fee income 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 $468.8 million at March 31, 2025, demonstrating the continued strength of our branchless core business model. Other income increased $12 thousand, or 3.5%, to $359 thousand due to increases in loan and other banking fees.
Current wording
Payment processing income was $5.1 million for the quarter ended June 30, 2025, a $215 thousand decrease from the same period in 2024, primarily due to changes in our overall merchant risk profile and composition. Payment processing volumes for the credit and debit card processing platform increased $855.3 million, or 9.2%, to $10.1 billion while transactions volume totaled 152.9 million for the quarter ended June 30, 2025. We continue to focus on the expansion of sales channels through ISOs, prudently managing risk while focusing on new merchant originations, increasing overall volumes as well as risk profiles, and 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, supports multiple processing platforms, manages daily risk across 92,000 small business merchants in all 50 states, and performs commercial treasury clearing services for $10.1 billion in volume across 152.9 million in transactions in the quarter ended June 30, 2025. ASP fee income remained relatively flat totaling $643 thousand for the second quarter of 2025. ASP fee income 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 $373.1 million at June 30, 2025, demonstrating the continued strength of our branchless core business model. Other income increased $62 thousand, or 18.6%, to $395 thousand due to increases in loan and other banking fees. During the quarter, we recognized a $432 thousand deferred gain on the 2023 sale of our Litify fintech investment as all remaining contingencies were resolved.
Previous wording
Income Tax Expense. We recorded income tax expense of $4.1 million for the three months ended March 31, 2025, reflecting an effective tax rate of 26.5%, compared to $3.6 million, or 26.5%, for the three months ended March 31, 2024.
Current wording
Income Tax Expense. We recorded income tax expense of $3.4 million for the three months ended June 30, 2025, reflecting an effective tax rate of 22.0%, compared to $3.9 million, or 27.0%, for the three months ended June 30, 2024. The decrease in the effective tax rate resulted from certain discrete tax benefits related to share-based compensation, specifically the exercise of stock options.
Previous wording
Employee compensation and benefits costs increased primarily due to increases in sales commissions, bonuses, year-end stock grants and related stock-based compensation, and, to a lesser extent, the impact of year end salary increases. The increase in sales related commissions is directly related to our regional business development officer (“BDO”) strategy and their success in the litigation market, attracting full-service commercial banking clients nationally and directly impacting commercial lending and core-deposit growth. 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. Professional and consulting services costs increased due to continuously evaluating business development opportunities in our national verticals, increased insurance and accounting costs, and costs related to the staffing needs for our Los Angeles private banking branch (scheduled to open in the summer of 2025). Occupancy and equipment costs increased due to amortization of internally developed software to support our digital marketing and risk management platforms and rent commencement related to our Los Angeles private banking branch. Other operating costs increased due to increases in regulatory expenses and other client development costs.
Current wording
Employee compensation and benefits costs increased primarily due increases in sales commissions, bonuses, year-end stock grants and related stock-based compensation, and, to a lesser extent, the impact of year end salary and benefits increases. The increase in sales related commissions is directly related to our regional BDO strategy and their success in the litigation market, attracting full-service commercial banking clients nationally and directly impacting commercial lending and core-deposit growth. 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. Professional and consulting services costs increased due to continuously evaluating business development opportunities in our national verticals, increased insurance and accounting costs, and costs related to staffing needs for our Los Angeles private banking branch. Other operating costs increased due to increases in regulatory expenses
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, 2025, cash and cash equivalents totaled $173.0 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, 2025, cash and cash equivalents totaled $163.0 million.
Previous wording
At March 31, 2025, through pledging of our securities and certain loans, we had the ability to borrow, on a secured basis, up to $429.6 million from the FHLB of New York and $50.8 million from the FRB of New York discount window. At March 31, 2025, we also had $17.5 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, 2025.
Current wording
At June 30, 2025, through pledging of our securities and certain loans, we had the ability to borrow, on a secured basis, up to $456.1 million from the FHLB of New York and $49.8 million from the FRB of New York discount window. At June 30, 2025, we also had $17.5 million in aggregated unsecured lines of credit with unaffiliated correspondent banks. No amounts were outstanding on any of the aforementioned lines as of June 30, 2025.
Previous wording
At March 31, 2025, our off-balance sheet sweeps funds totaled $468.8 million, of which $442.8 million, or 94.5%, was available to be swept on balance sheet as reciprocal client deposits.
Current wording
At June 30, 2025, our off-balance sheet sweeps funds totaled $373.1 million, of which $349.7 million, or 93.7%, 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 $1.11 billion at March 31, 2025, or 66% 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 $1.04 billion at June 30, 2025, or 58% of total deposits, creating a highly liquid and unlevered balance sheet.
Rearranged current paragraphs (7)
Current report — wording carried from elsewhere
Employee compensation and benefits costs increased primarily due increases in sales commissions, bonuses, year-end stock grants and related stock-based compensation, and, to a lesser extent, the impact of year end salary and benefits increases. The increase in sales related commissions is directly related to our regional business development officer (“BDO”) strategy and their success in the litigation market, attracting full-service commercial banking clients nationally and directly impacting commercial lending and core-deposit growth. Professional and consulting services costs increased due to continuously evaluating business development opportunities in our national verticals, and professional search costs related to staffing needs for our Los Angeles private banking branch (scheduled to open this summer). 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. Other operating costs increased due to increases in recruiting, training and other client development costs. Travel and business relations expenses increased as a result of our high touch sales efforts that complement our digital marketing efforts.
Current report — wording carried from elsewhere
Comparison of Operating Results for the Six Months Ended June 30, 2025 and 2024
Current report — wording carried from elsewhere
Interest Income. Interest income increased $11.6 million, or 21.7%, to $65.0 million for the six months ended June 30, 2025 from $53.5 million for the six months ended June 30, 2024 and was attributable to increases in income on loans, securities and interest earning cash. Throughout 2024, management tempered multifamily and commercial real estate loan growth in response to the economic environment, replacing the growth with the purchases of short duration agency mortgage-backed securities. This decision further enhanced our liquidity profile and improved our securities to asset ratio to approximately 16% in the current quarter.
Current report — wording carried from elsewhere
Noninterest Income. Noninterest income information is as follows:
Current report — wording carried from elsewhere
Payment processing income was $10.0 million for the six months ended June 30, 2025, a $599 thousand decrease from the same period in 2024, primarily due to changes in our overall merchant risk profile and composition. Payment processing volumes for the credit and debit card processing platform increased $1.5 billion, or 8.6%, to $19.4 billion while transactions volume totaled 293.3 million for the six months ended June 30, 2025. ASP fee income increased $157 thousand to $1.5 million for the six months ended June 30, 2025 as compared to the same period in 2024. ASP fee income is directly impacted by the average balances of off-balance sheet sweep funds as well as current short-term market interest rates. Other income increased $74 thousand, or 10.9%, to $754 thousand due to increases in loan and other banking fees. During the current quarter, we recognized a $432 thousand deferred gain on the 2023 sale of our Litify fintech investment as all remaining contingencies were resolved.
Current report — wording carried from elsewhere
Noninterest Expense. Noninterest expense information is as follows:
Current report — wording carried from elsewhere
and other client development costs. Occupancy and equipment costs increased due to amortization of internally developed software to support our digital marketing and risk management platforms and rent commencement related to our Los Angeles private banking branch. Travel and business relations expenses increased as a result of our high touch sales efforts that complement our digital marketing efforts and additional travel related to the opening of our Los Angeles private banking branch.