Esquire Financial Q3 Revenue and Adjusted Earnings Rise After Signature Merger

Esquire Financial Holdings, Inc. (NASDAQ: ESQ) reported higher third-quarter 2026 revenue and adjusted earnings after completing its merger with Signature Bank Chicago on August 1, a transaction that roughly doubled the company’s assets, loans and deposits while reducing its concentration in litigation-related banking.

GAAP net income for the three months ended September 30 rose to $17.5 million from $14.1 million a year earlier. Diluted GAAP earnings per share were $1.57, compared with $1.62 in the third quarter of 2025. Results included $8.9 million of merger expenses.

Excluding merger-related items and certain tax effects, adjusted net income increased to $23.6 million from $13.0 million, while adjusted diluted earnings per share reached $2.12, up from $1.49. The non-GAAP adjusted return on average assets was 2.34%, and adjusted return on average tangible equity was 23.1%.

Merger expands balance sheet and diversifies lending

Total assets reached $4.81 billion at September 30, up from $2.18 billion a year earlier. The combined company had approximately $3.4 billion of loans and $4.0 billion of deposits following the Signature transaction.

The acquisition materially changed Esquire’s business mix. Litigation-related loans declined to 42% of total loans from 68% at June 30, while litigation-related deposits fell to 54% of deposits from 79%. Management said the combination added a Chicago commercial banking franchise and expanded the company’s presence in the Midwest without relying on cost savings to support the transaction’s financial rationale.

Esquire’s loan portfolio generated a 7.57% yield in the quarter, compared with 7.78% for the quarter ended June 30. Commercial loans totaled $2.13 billion and represented 62% of the overall portfolio. Most were variable-rate loans tied to the prime rate, and approximately 75% of the variable-rate commercial portfolio had interest-rate floors established at origination or annual renewal.

The litigation lending portfolio continued to carry relatively high yields, with a weighted average interest rate of about 8.81%. The company reported an average loan-to-collateral fee value below 15%, average debt-service coverage above 4.0 times and average utilization of about 50% across committed and uncommitted credit lines and case-disbursement facilities.

Commercial real estate remains another significant lending category. Esquire reported a $456 million multifamily portfolio in New York, divided approximately evenly among rent-regulated, free-market and mixed properties. Commercial real estate exposure equaled 208% of bank-level regulatory Tier 1 capital plus the allowance for credit losses, or 198% on a consolidated basis.

Revenue rises as net interest income and fees increase

Third-quarter GAAP revenue rose to $61.4 million from $37.6 million a year earlier. Net interest income increased to $53.5 million from $31.3 million, while noninterest income rose to $7.9 million from $6.2 million. The company reported a 5.74% net interest margin.

Fee income, primarily from payment processing, accounted for 13% of quarterly revenue. Esquire said it was servicing 94,000 merchants across all 50 states, while additional fee revenue came from off-balance-sheet funds and customer-service fees added through Signature.

GAAP noninterest expense increased to $36.0 million from $18.4 million, reflecting merger expenses and the larger combined organization. The reported non-GAAP efficiency ratio was 58.6%. After excluding merger expenses, core deposit intangible amortization and other specified items, the adjusted efficiency ratio improved to 41.1% from 48.3% a year earlier.

Funding and capital remain management priorities

The total cost of funds, including noninterest-bearing demand deposits, was 1.13%, compared with 1.03% before the merger. Demand deposits and escrow-based IOLTA accounts represented 28% and 39% of total deposits, respectively, at quarter-end. Together, DDA and NOW deposits accounted for 68% of deposits.

Uninsured deposits, excluding $24.1 million of company deposits, totaled $1.67 billion, or 42% of total deposits. Esquire said about half of that amount was associated with clients maintaining broader commercial relationships, including loans, payment processing, operating accounts, escrow accounts and custodial services.

Available liquidity, consisting of cash, borrowing capacity and reciprocal client sweep capacity, totaled $1.62 billion, equivalent to 40% of deposits. The company also reported $398.1 million of Federal Home Loan Bank liquidity supported by pledged multifamily and residential loans.

At September 30, tangible equity to tangible assets was 10.91%, tangible book value was $40.48 per share, and the bank-level common equity Tier 1 ratio was 12.95%.

Management continues to emphasize organic growth in higher-yielding variable-rate commercial loans, national expansion of its litigation banking franchise and selective commercial real estate lending in the New York and Chicago metropolitan markets. The balance sheet remains asset-sensitive: Esquire estimated that a 100-basis-point increase in rates would raise projected annualized net interest income by 6.7%.

The outlook remains subject to integration and execution risks associated with the Signature merger, including the possibility that expected benefits may not be realized on schedule or at all. The company also identified potential changes in customer and employee relationships, broader economic and financial-market conditions, commercial real estate exposure and its level of uninsured deposits as relevant uncertainties. The presentation’s asset-quality disclosure also noted a $9.0 million charge-off in the NFL consumer loan portfolio.