Esquire Financial Holdings, Inc.

Hello everyone, thank you for joining us and welcome to the Esquire Financial Holdings Q2 2026 Earnings Release Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Andrew Sagliocca, CEO, Vice Chairman and President. Andrew, please go ahead.

Thank you, Paige. I want to let everyone know on the call that I'm joined in the room with Michael Lacapria, our SVP and Chief Financial Officer, as well as Eric Bader, our EVP and Chief Operating Officer. I'd like to start by thanking everybody and welcoming everybody to the investor call, including our current investors, analysts, board members, and employees. as well as our business partners and signature stakeholders, including their board employees and investors too. As Paige indicated, I'm going to kick off this call with some high-level thoughts and comments, then turn it over to Michael for a financial update, and then we can address any questions that any of the callers have. As highlighted in the earnings release, the signature merger is scheduled to close on August 1, 2026. The Chicago metro market represents one of the top three largest markets in the country, including New York City and Los Angeles, for both population and contingent fee law firms, which is our and many more. As we previously noted, we believe the signature merger will accelerate growth in the Chicago and Midwest markets in the future, where Esquire on a standalone basis currently underserves this very robust metro area. This is primarily because signature has a well-established and well-known Chicago-based management team and brand. And if we couple this with Esquire's deep understanding of this extremely large, complex, and fragmented national litigation vertical, which is approximately half a trillion dollars a year in settlements, we believe the combined company with its strong brand, culture, and foundation will drive sustained growth, industry-leading performance metrics, and industry-leading returns in the future. With that said, I'll turn it over to Michael to give you a financial update for the second quarter. Michael.

Thank you, Andrew. To those joining us on the call, I will provide a brief overview of our second quarter financial results as highlighted in our earnings release and investor presentation published earlier this morning. For the current quarter, we printed gap net income of $13 million or $1.49 per diluted share. These results included approximately $1.1 million of pre-tax merger related expenses associated with our acquisition of Signature Bank Corporation. Excluding these expenses, adjusted net income totaled $14 million or $1.60 per diluted share. Adjusted earnings increased 16% as compared to the prior year quarter, demonstrating continued strength across our business as we also continue to invest in our platform. Our average returns on assets and average equity were 2.09% and 17.06% respectively, excluding merger-related expenses. Adjusted returns on average assets and equity were 2.25% and 18.33% respectively. These results reflect the pace of our profitable growth and our operational efficiencies. Our net interest margin remained resilient at 596 basis points. That's despite the significant decline in short-term interest rates from peak levels experienced over the past several years. Further, Our margin was negatively impacted by approximately 10 basis points due to elevated interest earning cash balances funded by our core deposit franchise. Loan growth remained exceptionally strong. On a linked quarter basis, total loans increased $87.2 million, or 19% annualized, reaching $1.9 billion, while experiencing $76.1 million in loan payoffs during the quarter. This growth was driven by commercial loan and real estate loan production of $61.6 million and $25.6 million, respectively. As it relates to our litigation loan portfolio, we saw $72.6 million, or 24% annualized net growth, bringing our litigation book to $1.29 billion at a blended yield of 8.8%. This translates to 41% loan growth year over year. It is important to also note that client activity levels and production pipelines remain healthy as we enter the second half of the year. Despite deposit loan growth was equally strong. Total deposits increased $77.1 million on a link quarter basis, or 15% annualized, reaching $2.18 billion. Our cost of funds remained relatively flat at 1.03% as we continue to effectively manage our funding base. This growth was fueled by litigation-related escrow and IOLTA deposits, reflecting the continued success of our relationship-focused commercial banking strategy. Off-balance sheet sweep balances totaled $1 billion, with approximately 38% of that available for liquidity purposes if needed. administrative service payment fee income on these balances totaled $1.1 million for the quarter. Total liquidity, including both cash and borrowing capacity, was $1.2 billion as of quarter end. Credit quality remained solid. Our allowance for credit losses remained at 1.3% of total loans consistent with the prior quarter. and we have two non-performing loans totaling $5.1 million, representing 20 basis points on total assets. During the quarter, we transferred a previously criticized multifamily credit to non-accrual status and recognized a $1.6 million charge-off. Importantly, we have no additional exposures to that real estate sponsor, no other real estate credits assessed as special mention or substandard, no exposure to commercial office, and limited exposure to hospitality at 13.17 million. As far as our litigation loan portfolio is concerned, it's worth noting we have no current exposure assessed as special mention or substandard. Non-interest income remains stable at 6.4 million, representing approximately 15% of total revenue. Our payments platform continues to be a meaningful contributor to earnings and client engagement. During the quarter, we supported 93,000 small business clients nationwide, processing approximately $10.6 billion in payment volume across 153 million transactions. Operational expenses continue to reflect disciplined investment and future growth. Total non-interest expense was $21.1 million including merger-related costs associated with pending signature acquisition. Excluding these expenses, our adjusted efficiency ratio was 47.6%, reflecting continued operating leverage while we invest in technology, business development, risk management, and client service initiatives. Our capital foundation also remains strong. At quarter end, consolidated equity to assets and the bank level tier one capital ratios were approximately 12.5% and 14.2% respectively. This positioning us well above regulatory well capitalized standards and provides us substantial flexibility as we approach the closing of the signature transaction. With that, I'll turn it back over to Andrew for his additional comments.