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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-38131

Esquire Financial Holdings, Inc.

(Exact Name of Registrant as Specified in Its Charter)


Maryland		27-5107901
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

100 Jericho Quadrangle, Suite 100, Jericho, New York		11753
(Address of Principal Executive Offices)		(Zip Code)

(516) 535-2002

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value

ESQ

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such requirements for the past 90 days.

YES ⌧ NO ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

YES ⌧ NO ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ◻		Accelerated filer ☒
Non-accelerated filer ◻		Smaller reporting company ◻
		Emerging growth company ◻

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES ☐ NO ⌧

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of August 1, 2025, there were 8,538,558 outstanding shares of the issuer’s common stock.

Table of Contents

Esquire Financial Holdings, Inc.

Form 10-Q

Table of Contents

		Page
PART I. FINANCIAL INFORMATION		3

Item 1.	Financial Statements (unaudited)	3

	Consolidated Statements of Financial Condition	3

	Consolidated Statements of Income	4

	Consolidated Statements of Comprehensive Income	5

	Consolidated Statements of Changes in Stockholders’ Equity	6

	Consolidated Statements of Cash Flows	7

	Notes to Interim Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	46

Item 4.	Controls and Procedures	46

PART II. OTHER INFORMATION		47

Item 1.	Legal Proceedings	47

Item 1A.	Risk Factors	47

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47

Item 3.	Defaults Upon Senior Securities	47

Item 4.	Mine Safety Disclosures	47

Item 5.	Other Information	48

Item 6.	Exhibits	48

	SIGNATURES	49

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1.Financial Statements

ESQUIRE FINANCIAL HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Dollars in thousands, except per share data)

(Unaudited)


	June 30,		December 31,
	2025		2024
Assets:
Cash and cash equivalents	$	162,973	$	126,329
Securities available-for-sale, at fair value		257,375		241,746
Securities held-to-maturity, at cost (fair value of $58,503 and $60,931, at June 30, 2025 and December 31, 2024, respectively)		64,470		68,660
Securities, restricted, at cost		3,173		3,034

Loans held for investment		1,494,599		1,397,021
Less: allowance for credit losses		(19,407)		(20,979)
Loans, net of allowance		1,475,192		1,376,042
Premises and equipment, net		4,228		2,436
Accrued interest receivable		11,091		10,124
Other assets		81,475		64,132
Total assets	$	2,059,977	$	1,892,503

Liabilities:
Deposits:
Demand	$	567,156	$	497,958
Savings, NOW and money market		1,209,066		1,130,174
Time		6,106		14,104
Total deposits		1,782,328		1,642,236

Accrued expenses and other liabilities		14,093		13,173
Total liabilities		1,796,421		1,655,409

Commitments and contingencies		—		—

Stockholders’ equity:
Preferred stock, par value $0.01; authorized 2,000,000 shares; none issued		—		—
Common stock, par value $0.01; authorized 15,000,000 shares; 8,618,457 and 8,473,651 shares issued, respectively; and 8,499,559 and 8,354,753 shares outstanding, respectively		86		85
Additional paid-in capital		106,811		104,052
Retained earnings		173,266		152,932
Accumulated other comprehensive loss		(10,919)		(14,287)
Treasury stock at cost (118,898 and 118,898 shares, respectively)		(5,688)		(5,688)
Total stockholders’ equity		263,556		237,094
Total liabilities and stockholders’ equity	$	2,059,977	$	1,892,503

See accompanying notes to interim consolidated financial statements.

Table of Contents

ESQUIRE FINANCIAL HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share data)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Interest income:
Loans held for investment	$	28,762	$	24,216	$	55,572	$	47,605
Securities, includes restricted stock		3,127		2,023		6,169		3,628
Interest earning cash and other		1,647		1,146		3,308		2,225
Total interest income		33,536		27,385		65,049		53,458

Interest expense:
Savings, NOW and money market deposits		4,225		2,932		8,009		6,030
Time deposits		56		130		175		241
Borrowings		1		1		2		2
Total interest expense		4,282		3,063		8,186		6,273

Net interest income		29,254		24,322		56,863		47,185
Provision for credit losses		3,525		1,000		5,025		2,000
Net interest income after provision for credit losses		25,729		23,322		51,838		45,185

Noninterest income:
Payment processing fees		5,107		5,322		10,019		10,618
Administrative service income		643		620		1,523		1,366
Customer related fees, service charges and other		827		333		1,186		680
Total noninterest income		6,577		6,275		12,728		12,664

Noninterest expense:
Employee compensation and benefits		10,216		9,525		20,281		18,686
Occupancy and equipment		1,168		1,156		2,300		2,083
Professional and consulting services		1,291		857		2,555		1,808
FDIC and regulatory assessments		293		233		563		455
Advertising and marketing		811		881		1,662		1,753
Travel and business relations		303		180		609		458
Data processing		2,060		1,722		3,980		3,233
Other operating expenses		920		678		1,860		1,324
Total noninterest expense		17,062		15,232		33,810		29,800

Net income before income taxes		15,244		14,365		30,756		28,049
Income tax expense		3,354		3,878		7,459		7,504

Net income	$	11,890	$	10,487	$	23,297	$	20,545

Earnings per share
Basic	$	1.48	$	1.34	$	2.91	$	2.64
Diluted	$	1.38	$	1.25	$	2.70	$	2.45

See accompanying notes to interim consolidated financial statements.

Table of Contents

ESQUIRE FINANCIAL HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Net income	$	11,890	$	10,487	$	23,297	$	20,545
Other comprehensive income (loss):
Unrealized gains (losses) arising during the period on securities available-for-sale		1,039		176		4,849		(1,388)
Tax effect		(275)		(48)		(1,481)		382
Total other comprehensive income (loss)		764		128		3,368		(1,006)
Total comprehensive income	$	12,654	$	10,615	$	26,665	$	19,539

See accompanying notes to interim consolidated financial statements.

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ESQUIRE FINANCIAL HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Dollars in thousands, except per share data)

(Unaudited)


												Accumulated
								Additional				other				Total
	Preferred	Common		Preferred		Common		paid-in		Retained		comprehensive		Treasury		stockholders'
	shares	shares		stock		stock		capital		earnings		loss		stock		equity
Balance at April 1, 2025	—	8,431,774	$	—	$	85	$	105,150	$	162,860	$	(11,683)	$	(5,688)	$	250,724
Net income	—	—		—		—		—		11,890		—		—		11,890
Other comprehensive income	—	—		—		—		—		—		764		—		764
Exercise of stock options, net of repurchases (4,132 shares)	—	51,633		—		1		470		—		—		—		471
Restricted stock grants	—	16,152		—		—		—		—		—		—		—
Stock compensation expense	—	—		—		—		1,191		—		—		—		1,191
Cash dividends declared to common stockholders ($0.175 per share)	—	—		—		—		—		(1,484)		—		—		(1,484)
Balance at June 30, 2025	—	8,499,559	$	—	$	86	$	106,811	$	173,266	$	(10,919)	$	(5,688)	$	263,556

												Accumulated
								Additional				other				Total
	Preferred	Common		Preferred		Common		paid-in		Retained		comprehensive		Treasury		stockholders'
	shares	shares		stock		stock		capital		earnings		loss		stock		equity
Balance at April 1, 2024	—	8,292,789	$	—	$	84	$	100,853	$	123,077	$	(14,369)	$	(2,567)	$	207,078
Net income	—	—		—		—		—		10,487		—		—		10,487
Other comprehensive income	—	—		—		—		—		—		128		—		128
Exercise of stock options, net of repurchases (257 shares)	—	159		—		—		—		—		—		—		—
Stock compensation expense	—	—		—		—		962		—		—		—		962
Cash dividends declared to common stockholders ($0.15 per share)	—	—		—		—		—		(1,244)		—		—		(1,244)
Balance at June 30, 2024	—	8,292,948	$	—	$	84	$	101,815	$	132,320	$	(14,241)	$	(2,567)	$	217,411

												Accumulated
								Additional				other				Total
	Preferred	Common		Preferred		Common		paid-in		Retained		comprehensive		Treasury		stockholders'
	shares	shares		stock		stock		capital		earnings		loss		stock		equity
Balance at January 1, 2025	—	8,354,753	$	—	$	85	$	104,052	$	152,932	$	(14,287)	$	(5,688)	$	237,094
Net income	—	—		—		—		—		23,297		—		—		23,297
Other comprehensive income	—	—		—		—		—		—		3,368		—		3,368
Exercise of stock options, net of repurchases (16,027 shares)	—	109,180		—		1		479		—		—		—		480
Restricted stock grants	—	35,626		—		—		—		—		—		—		—
Stock compensation expense	—	—		—		—		2,280		—		—		—		2,280
Cash dividends declared to common stockholders ($0.35 per share)	—	—		—		—		—		(2,963)		—		—		(2,963)
Balance at June 30, 2025	—	8,499,559	$	—	$	86	$	106,811	$	173,266	$	(10,919)	$	(5,688)	$	263,556

												Accumulated
								Additional				other				Total
	Preferred	Common		Preferred		Common		paid-in		Retained		comprehensive		Treasury		stockholders'
	shares	shares		stock		stock		capital		earnings		loss		stock		equity
Balance at January 1, 2024	—	8,287,848	$	—	$	84	$	99,713	$	114,261	$	(13,235)	$	(2,268)	$	198,555
Net income	—	—		—		—		—		20,545		—		—		20,545
Other comprehensive loss	—	—		—		—		—		—		(1,006)		—		(1,006)
Exercise of stock options, net of repurchases (257 shares)	—	11,159		—		—		173		—		—		—		173
Stock compensation expense	—	—		—		—		1,929		—		—		—		1,929
Cash dividends declared to common stockholders ($0.30 per share)	—	—		—		—		—		(2,486)		—		—		(2,486)
Shares received related to tax withholding	—	(6,059)		—		—		—		—		—		(299)		(299)
Balance at June 30, 2024	—	8,292,948	$	—	$	84	$	101,815	$	132,320	$	(14,241)	$	(2,567)	$	217,411

See accompanying notes to interim consolidated financial statements.

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ESQUIRE FINANCIAL HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)



	Six Months Ended
	June 30,
	2025		2024
Cash flows from operating activities:
Net income	$	23,297	$	20,545
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses		5,025		2,000
Depreciation and amortization of premises and equipment		524		370
Stock compensation expense		2,280		1,929
Gain on equity investment		(432)		—
Net amortization (accretion):
Securities		248		164
Loans		(53)		(247)
Right of use asset		373		279
Software		927		1,044
Changes in other assets and liabilities:
Accrued interest receivable		(967)		(40)
Other assets		(5,687)		(6,305)
Operating lease liability		(443)		(352)
Accrued expenses and other liabilities		1,205		608
Net cash provided by operating activities		26,297		19,995
Cash flows from investing activities:
Net change in loans		(117,467)		(53,512)
Purchases of securities available-for-sale		(31,069)		(65,183)
Principal repayments on securities available-for-sale		20,090		8,972
Principal repayments on securities held-to-maturity		4,140		3,891
Purchases of securities, restricted		(139)		(106)
Proceeds from equity investment		1,232		1,467
Purchase of equity investment		(700)		(3,524)
Purchases of premises and equipment		(2,316)		(577)
Development of capitalized software		(1,191)		(1,013)
Net cash used in investing activities		(127,420)		(109,585)
Cash flows from financing activities:
Net increase in deposits		140,092		79,594
Decrease in borrowings		(1)		(1)
Exercise of stock options, net of repurchases		480		173
Tax withholding payments for vested equity awards		—		(299)
Cash dividends paid to common stockholders		(2,804)		(2,353)
Net cash provided by financing activities		137,767		77,114
Increase (decrease) in cash and cash equivalents		36,644		(12,476)
Cash and cash equivalents at beginning of the period		126,329		165,209
Cash and cash equivalents at end of the period	$	162,973	$	152,733

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	8,186	$	6,278
Taxes		9,976		8,932
Noncash transactions:
Dividends declared but not paid		159		133
Exchange of noncash instruments		—		(300)

See accompanying notes to interim consolidated financial statements.

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ESQUIRE FINANCIAL HOLDINGS, INC.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 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, 2024 and 2023. Operating results for the three and six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025 or any other period.

Subsequent Events

The Company has evaluated events for recognition and disclosure through the date of issuance.

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. Gains or losses on this investment are the result of changes in projected cash flows from the VIE’s loan portfolio based on expected claim settlements and the Company’s exposure is limited to its investment. For the three and six months ended June 30, 2025, the Company did not recognize an equity method gain or loss on its investment. The Company recognized an equity method loss of approximately $500 thousand on its investment for the three and six months ended June 30, 2024. As of June 30, 2025, the investment’s carrying amount was $9.0 million with a remaining life of 3.8 years, and a carrying amount of $9.4 million as of December 31, 2024.

During 2024, the Company closed on an investment 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. For the three and six months ended June 30, 2025 and 2024, the Company did not recognize an equity method gain or loss on its investment. The investment’s carrying amount was $4.8 million and $4.1 million as of June 30, 2025 and December 31, 2024, respectively and there are no remaining unfunded commitments as of June 30, 2025. The Company funded $250 thousand and $0 for the three months ended June 30, 2025 and June 30, 2024, respectively. The Company funded $700 thousand and $3.5 million for the six months ended June 30, 2025 and June 30, 2024, 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.

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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.

Impact of Issued but Not Yet Effective Accounting Standards

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, intended to enhance the transparency of income tax disclosures, primarily related to the rate reconciliation and income taxes paid information. Specifically, the amendments in this ASU require disclosure of: (i) a tabular reconciliation, using both percentages and reporting currency amounts, with prescribed categories that are required to be disclosed, and the separate disclosure and disaggregation of prescribed reconciling items with an effect equal to 5% or more of the amount determined by multiplying pretax income from continuing operations by the applicable statutory rate; (ii) a qualitative description of the states and local jurisdictions that make up the majority (greater than 50%) of the effect of the state and local income taxes; and (iii) amount of income taxes paid, net of refunds received, disaggregated by federal, state, and foreign taxes and by individual jurisdictions that comprise 5% or more of total income taxes paid, net of refunds received. The ASU also includes other amendments to improve the effectiveness of income tax disclosures. The transition method is prospective with retrospective method permitted. The new disclosure requirements are effective for the Company for the annual reporting period ended December 31, 2025 which will be reflected on the annual Consolidated Financial Statements.

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NOTE 2 — Debt Securities

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


	June 30, 2025
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value

	(In thousands)
Securities available-for-sale:
Mortgage-backed securities – agency	$	100,724	$	47	$	(14,051)	$	86,720
Collateralized mortgage obligations ("CMOs") – agency		171,507		985		(1,837)		170,655
Total available-for-sale	$	272,231	$	1,032	$	(15,888)	$	257,375

			Gross		Gross
	Amortized		Unrecognized		Unrecognized		Fair
	Cost		Gains		Losses		Value

	(In thousands)
Securities held-to-maturity:
CMOs – agency	$	64,470	$	16	$	(5,983)	$	58,503
Total held-to-maturity	$	64,470	$	16	$	(5,983)	$	58,503

	December 31, 2024
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value

	(In thousands)
Securities available-for-sale:
Mortgage-backed securities – agency	$	103,009	$	—	$	(17,057)	$	85,952
CMOs – agency		158,442		271		(2,919)		155,794
Total available-for-sale	$	261,451	$	271	$	(19,976)	$	241,746

			Gross		Gross
	Amortized		Unrecognized		Unrecognized		Fair
	Cost		Gains		Losses		Value

	(In thousands)
Securities held-to-maturity:
CMOs – agency	$	68,660	$	—	$	(7,729)	$	60,931
Total held-to-maturity	$	68,660	$	—	$	(7,729)	$	60,931

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 or planned amortization classes (“PACs”). 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 were no sales or calls of securities for the three and six months ended June 30, 2025 and 2024.

At June 30, 2025, securities having a fair value of $264.3 million were pledged to the Federal Home Loan Bank of New York (“FHLB”) for borrowing capacity totaling $247.5 million. At December 31, 2024, securities having a fair value of $249.6 million were pledged to the FHLB for borrowing capacity totaling $232.3 million. At June 30, 2025 and December 31, 2024, the Company had no outstanding FHLB advances.

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At June 30, 2025, securities having a fair value of $51.5 million were pledged to the Federal Reserve Bank of New York (“FRB”) for borrowing capacity totaling $49.8 million. At December 31, 2024, securities having a fair value of $53.0 million were pledged to the FRB for borrowing capacity totaling $51.4 million. At June 30, 2025 and December 31, 2024, the Company had no 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:


	June 30, 2025
	Less Than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses

	(In thousands)
Securities available-for-sale:
Mortgage-backed securities – agency	$	2,942	$	(17)	$	74,934	$	(14,034)	$	77,876	$	(14,051)
CMOs – agency		19,642		(189)		9,919		(1,648)		29,561		(1,837)
Total available-for-sale	$	22,584	$	(206)	$	84,853	$	(15,682)	$	107,437	$	(15,888)

	Less Than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrecognized Losses		Fair Value		Gross Unrecognized Losses		Fair Value		Gross Unrecognized Losses

	(In thousands)
Securities held-to-maturity:
CMOs – agency	$	—	$	—	$	54,663	$	(5,983)	$	54,663	$	(5,983)
Total held-to-maturity	$	—	$	—	$	54,663	$	(5,983)	$	54,663	$	(5,983)

	December 31, 2024
	Less Than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses

	(In thousands)
Securities available-for-sale:
Mortgage-backed securities – agency	$	6,341	$	(84)	$	79,610	$	(16,973)	$	85,951	$	(17,057)
CMOs – agency		94,642		(998)		10,729		(1,921)		105,371		(2,919)
Total available-for-sale	$	100,983	$	(1,082)	$	90,339	$	(18,894)	$	191,322	$	(19,976)

	Less Than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrecognized Losses		Fair Value		Gross Unrecognized Losses		Fair Value		Gross Unrecognized Losses

	(In thousands)
Securities held-to-maturity:
CMOs – agency	$	—	$	—	$	56,523	$	(7,729)	$	56,523	$	(7,729)
Total held-to-maturity	$	—	$	—	$	56,523	$	(7,729)	$	56,523	$	(7,729)

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, 2025.

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As of June 30, 2025 and December 31, 2024, none of the Company’s available-for-sale securities were in an unrealized loss position due to credit, and therefore no allowance for credit losses on available-for-sale securities was required. Additionally, there was no 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, 2025 and December 31, 2024.

Accrued interest receivable on securities totaling $1.1 million at June 30, 2025 and $1.1 million at December 31, 2024, 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:


	June 30,		December 31,
	2025		2024

	(In thousands)
Real estate:
Multifamily	$	366,439	$	355,165
Commercial real estate		91,166		87,038
1 – 4 family		10,093		14,665
Total real estate		467,698		456,868
Commercial		1,007,827		920,567
Consumer		18,584		19,339
Total loans held for investment		1,494,109		1,396,774
Deferred fees and unearned premiums, net		490		247
Allowance for credit losses		(19,407)		(20,979)
Loans held for investment, net	$	1,475,192	$	1,376,042

The following tables present the activity in the allowance for credit losses by class for the three months ending June 30, 2025 and June 30, 2024:


			Commercial
	Multifamily		Real Estate		1‑4 Family		Commercial		Consumer		Total

	(In thousands)
June 30, 2025
Allowance for credit losses:
Beginning balance	$	4,207	$	663	$	45	$	13,828	$	718	$	19,461
Provision (credit) for credit losses		1,114		18		(8)		2,332		69		3,525
Recoveries		—		—		—		—		6		6
Loans charged-off		(308)		—		—		(3,250)		(27)		(3,585)
Total ending allowance balance	$	5,013	$	681	$	37	$	12,910	$	766	$	19,407

June 30, 2024
Allowance for credit losses:
Beginning balance	$	3,311	$	791	$	61	$	12,631	$	729	$	17,523
Provision (credit) for credit losses		92		(47)		(6)		904		57		1,000
Recoveries		—		—		—		—		5		5
Loans charged-off		—		—		—		—		(7)		(7)
Total ending allowance balance	$	3,403	$	744	$	55	$	13,535	$	784	$	18,521

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The following tables present the activity in the allowance for credit losses by class for the six months ending June 30, 2025 and June 30, 2024:


			Commercial
	Multifamily		Real Estate		1‑4 Family		Commercial		Consumer		Total
June 30, 2025
Allowance for credit losses:
Beginning balance	$	5,116	$	691	$	52	$	14,283	$	837	$	20,979
Provision (credit) for credit losses		3,145		(10)		64		1,877		(51)		5,025
Recoveries		—		—		—		—		25		25
Loans charged-off		(3,248)		—		(79)		(3,250)		(45)		(6,622)
Total ending allowance balance	$	5,013	$	681	$	37	$	12,910	$	766	$	19,407

June 30, 2024
Allowance for credit losses:
Beginning balance	$	3,236	$	823	$	58	$	12,056	$	458	$	16,631
Provision (credit) for credit losses		167		(79)		(3)		1,479		436		2,000
Recoveries		—		—		—		—		24		24
Loans charged-off		—		—		—		—		(134)		(134)
Total ending allowance balance	$	3,403	$	744	$	55	$	13,535	$	784	$	18,521

As of June 30, 2025, there was one collateral dependent multifamily loan secured by real estate totaling $8.0 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. As of December 31, 2024, there was one collateral dependent multifamily loan secured by real estate totaling $10.9 million, with no associated specific reserve 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, 2025 and December 31, 2024:


									Total Past
	30-59		60-89		90 Days				Due &
	Days		Days		or More		Nonaccrual		Nonaccrual		Loans Not
	Past Due		Past Due		Past Due		Loans		Loans		Past Due		Total

	(In thousands)
June 30, 2025
Multifamily	$	—	$	—	$	—	$	8,000	$	8,000	$	358,439	$	366,439
Commercial real estate		—		—		—		—		—		91,166		91,166
1 – 4 family		—		—		—		—		—		10,093		10,093
Commercial		—		—		—		736		736		1,007,091		1,007,827
Consumer		124		—		—		—		124		18,460		18,584
Total	$	124	$	—	$	—	$	8,736	$	8,860	$	1,485,249	$	1,494,109

									Total Past
	30-59		60-89		90 Days				Due &
	Days		Days		or More		Nonaccrual		Nonaccrual		Loans Not
	Past Due		Past Due		Past Due		Loans		Loans		Past Due		Total

	(In thousands)
December 31, 2024
Multifamily	$	—	$	—	$	—	$	10,940	$	10,940	$	344,225	$	355,165
Commercial real estate		—		—		—		—		—		87,038		87,038
1 – 4 family		—		—		—		—		—		14,665		14,665
Commercial		—		2		—		—		2		920,565		920,567
Consumer		—		—		—		—		—		19,339		19,339
Total	$	—	$	2	$	—	$	10,940	$	10,942	$	1,385,832	$	1,396,774

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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.

Table of Contents

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:


	June 30, 2025
	2025		2024		2023		2022		2021		2020 and Prior		Revolving		Revolving-Term		Total

	(In thousands)
Multifamily:
Pass	$	23,485	$	26,514	$	104,810	$	26,379	$	100,107	$	71,192	$	—	$	—	$	352,487
Special Mention		—		—		—		—		6,098		—		—		—		6,098
Substandard		8,000		—		—		—		—		—		—		—		8,000
Doubtful		—		—		—		—		—		—		—		—		—
Total		31,485		26,514		104,810		26,379		106,205		71,192		—		—		366,585
Current period gross charge-offs		—		—		—

Esquire Financial Holdings, Inc. 10-Q