Executive Summary

Q3 2025 delivered record earnings and resilient profitability: GAAP net income of $14.1M ($1.62 diluted EPS) and adjusted EPS of $1.47; ROA 2.61%, ROE 20.83%, NIM 6.04% with strong core deposit and commercial loan growth supporting results .
Against S&P Global consensus, ESQ modestly beat EPS (Adjusted $1.47 vs $1.47*) and delivered a sizable revenue beat ($35.82M* vs $30.16M*), continuing a multi-quarter trend of revenue outperformance as balance sheet scale increases; GAAP EPS includes a $1.3M discrete tax benefit lowering ETR to 19.5% .
Core deposit growth (+$97.1M linked; cost of deposits 1.03%) and variable-rate law firm lending expansion (+$74.6M linked) underpinned NIM stability despite elevated interest-earning cash and lower short-term rates; loan-to-deposit ratio was 82% and liquidity remained robust with ~$1.1B available plus $412M off-balance sweeps .
Credit remained solid with ACL/loans at 1.37% and NPLs of $8.6M; earlier 1H25 charge-offs (one merchant loan, one multifamily) are contained; capital is strong (CET1 15.27%) .
Potential stock catalysts: sustained NIM resilience with very low funding costs, continued national litigation lending growth, and operating leverage vs. watch items including muted payments fee growth and macro/NY multifamily dynamics .

What Went Well and What Went Wrong

What Went Well
- Record quarter with resilient NIM (6.04%) and strong operating metrics (efficiency ratio 48.9%) despite growth investments and LA office opening .
- Core deposit engine: +$97.1M linked quarter to $1.87B; cost of deposits 1.03% with 54% in longer-duration IOLTA/escrow/settlement deposits; off-balance sweeps $412M (~95% available) .
- Litigation-focused commercial loan growth: +$74.6M linked (33% annualized) within higher-yield variable-rate loans (avg 7.98% loan yield) supporting NII; loan interest income +22.8% YoY .
- Management tone: “foundation for sustainable growth” and “state-of-the-art” HQ investment to attract talent and serve national verticals (Chairman Coelho and CEO Sagliocca) .
What Went Wrong
- Payments fee growth muted; payment processing income $5.1M flat YoY due to merchant risk mix; volumes +9.5% YoY to $10.1B but transactions 151.8M showed limited fee tailwind .
- Higher opex: noninterest expense +19.5% YoY to $18.4M on compensation/tech/consulting/travel/LA occupancy; efficiency ratio ticked up vs Q2 .
- Provision and credit context: Q3 provision $1.75M (vs $1.0M 3Q24) and YTD charge-offs ($6.2M) tied to one merchant and one multifamily loan; ACL/loans 1.37% (down YoY with growth), management views reserve adequate amid NY multifamily uncertainty .

Financial Results

Profitability & margins (quarterly trend)

Metric	Q1 2025	Q2 2025	Q3 2025
Net Income ($M)	$11.41	$11.89	$14.06
Diluted EPS ($)	$1.33	$1.38	$1.62 (Adj $1.47)
Net Interest Income ($M)	$27.61	$29.25	$31.34
Noninterest Income ($M)	$6.15	$6.58	$6.23
Net Interest Margin (%)	5.96%	6.03%	6.04%
Efficiency Ratio (%)	49.6%	47.6%	48.9%

YoY snapshot

Metric	Q3 2024	Q3 2025
Net Income ($M)	$11.36	$14.06
Diluted EPS ($)	$1.34	$1.62 (Adj $1.47)
ROA (%)	2.62%	2.61%
ROE (%)	20.29%	20.83%
Net Interest Margin (%)	6.16%	6.04%
Efficiency Ratio (%)	48.1%	48.9%

Balance sheet and KPIs

Metric	Q1 2025	Q2 2025	Q3 2025
Loans HFI ($B)	$1.416	$1.495	$1.547
Total Deposits ($B)	$1.688	$1.782	$1.879
Loan/Deposit Ratio (%)	84%	84%	82%
CET1 (%) (Bank)	15.24%	14.89%	15.27%
Nonperforming Loans ($M)	$8.00	$8.74	$8.65
ACL / Loans (%)	1.37%	1.30%	1.37%
Cost of Deposits (%)	0.94%	0.98%	1.03%
Off-Balance Sweeps ($M)	$468.8	$373.1	$411.6
Payment Volume ($B)	$9.3	$10.1	$10.1

Loan portfolio mix (loans HFI)

Category	Sep 30, 2024	Jun 30, 2025	Sep 30, 2025
Litigation-related Commercial ($M, %)	$727.7, 56.1%	$918.4, 61.5%	$993.1, 64.2%
Total Commercial ($M, %)	$825.4, 63.6%	$1,007.8, 67.5%	$1,048.6, 67.8%
Total Real Estate ($M, %)	$453.2, 34.9%	$467.7, 31.3%	$481.0, 31.1%
Multifamily ($M, %)	$350.9, 27.0%	$366.4, 24.5%	$365.3, 23.6%
Other Commercial ($M, %)	$97.7, 7.5%	$89.4, 6.0%	$55.5, 3.6%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Dividend per share	Next payment (Dec 1, 2025)	$0.175 (Q2–Q3 2025)	$0.175 declared Oct 30, 2025	Maintained
NIM / Revenue / Expenses / Loan Growth	FY/Q4 2025	Not provided	Not provided in 8-K/PR	N/A
Effective Tax Rate	Q3 2025	~27% normalized	19.5% due to $1.3M discrete benefit	One-time benefit

No formal quantitative guidance beyond dividend; management reiterated strategic investments and capital strength .

Earnings Call Themes & Trends

Note: A Q3 2025 earnings call transcript was not available in our document set; themes below reflect quarterly disclosures and investor materials.

Topic	Q1 2025 (Mar)	Q2 2025 (Jun)	Q3 2025 (Sep)	Trend
AI/Technology enablement	Emphasis on proprietary CRM, digital marketing cloud; AI used for sales/marketing, not underwriting	Continued tech investments; data processing costs rising with scaling	Best-in-class tech stack and AI-driven ABM cited in investor deck	Increasing investment/scale
Deposits & funding	+$45.9M linked; cost 0.94%; sweeps $469M	+$94.2M linked; cost 0.98%; sweeps $373M	+$97.1M linked; cost 1.03%; sweeps $412M	Strong growth; low cost holding
Litigation lending growth	Variable-rate, floors, +$187.5M avg loans YoY	+$83.0M linked growth in litigation loans	+$74.6M linked growth; avg loan yield 7.98%	Sustained momentum
Asset quality	One MF nonaccrual with $2.9M charge-off; ACL 1.37%	One merchant loan charge-off $3.3M; NPLs $8.7M; ACL 1.30%	NPLs $8.6M; ACL 1.37%; reserve deemed adequate	Stabilizing after 1H events
NIM and rates	NIM 5.96%; elevated cash weighs	NIM 6.03%; cash balances elevated	NIM 6.04%; elevated cash (189.4M avg) offsets yields	Stable ~6%
Geographic expansion	LA private banking branch planned	LA facility opening this summer	LA flagship opened; HQ lease signed	Execution progressing
Payments vertical	$9.3B volume; fee income softer	$10.1B volume; fee income muted	$10.1B volume; fee income muted	Volume up, fees tempered

Management Commentary

“By deeply understanding and serving our key national verticals and local markets and continuously investing in our future, we've established a strong culture and foundation for sustainable growth and continued industry leadership, as reflected in our top tier performance metrics, resilient net interest margin, and strong core deposit and commercial loan growth on a national basis.” — Andrew C. Sagliocca, Vice Chairman, CEO & President .
“Our investment in a new headquarters will position us to attract top talent … support future expansion, and allow us to continue to deliver exceptional client service.” — Tony Coelho, Chairman of the Board .

Q&A Highlights

A Q3 2025 earnings call transcript was not available in our dataset; no Q&A content could be reviewed. We will update this section if the transcript is released or becomes accessible (we searched for an earnings-call-transcript and found none for Q3 2025).

Estimates Context

Consensus vs. actuals (S&P Global)

Metric	Q1 2025 Estimate*	Q1 2025 Actual	Q2 2025 Estimate*	Q2 2025 Actual	Q3 2025 Estimate*	Q3 2025 Actual
EPS (Primary)	1.3133*	1.33	1.38*	1.38	1.4667*	1.47 (Adj)
Revenue ($)	30.71M*	32.26M*	28.26M*	32.31M*	30.16M*	35.82M*

Q3 2025: EPS essentially in-line (Adj $1.47 vs $1.4667*); revenue beat by ~~$5.66M (~~+18.8% relative) on stronger NII scale and noninterest income stability*.
Q2 2025: EPS in-line; revenue beat by ~$4.04M*. Q1 2025: EPS beat by ~$0.02; revenue beat by ~$1.55M*.
Values retrieved from S&P Global.*

Key Takeaways for Investors

Core growth engine intact: low-cost, relationship deposits (1.03% cost) and variable-rate litigation lending continue to scale, supporting ~6% NIM in a softer rate tape .
Quality of earnings: GAAP EPS benefited from a discrete tax item ($1.3M); normalized EPS ($1.47) matched consensus while revenue materially outpaced, signaling operating momentum beyond tax effects .
Credit watch items are contained and well-reserved; earlier charge-offs are isolated (merchant loan, one MF), with ACL/loans at 1.37% and NPLs modest at 0.56% of loans .
Payments vertical: strong volume growth but mix/risk management muted fee growth — a source of upside if merchant mix improves without sacrificing risk discipline .
Liquidity and capital are robust (CET1 15.27%; $1.1B+ available liquidity plus $412M sweeps), offering optionality to fund growth and absorb macro bumps without leverage .
Strategic investments (LA presence, new HQ, tech stack/AI for marketing) should sustain client acquisition and support operating leverage as scale builds .
Near-term setup: Continued revenue beats are plausible if deposit growth persists and loan deployment remains strong; monitor cost trajectory, NY multifamily backdrop, and payments fee trajectory for multiple expansion .

Appendix: Additional Disclosures and Prior-Quarter Sources

Q3 2025 8-K Earnings Release and Investor Presentation: detailed P&L, balance sheet, non-GAAP reconciliations, and strategic commentary - -.
Q2 2025 8-K: linked-quarter growth, charge-off detail, operating metrics - -.
Q1 2025 8-K: initial 2025 NIM expansion, deposit/sweep levels, nonaccrual multifamily charge-off - -.
Dividend press release (Oct 30, 2025): maintained at $0.175 .
Recognition press release (Sept 16, 2025): S&P Global deposit franchise ranking .

Esquire Financial Holdings, Inc. (ESQ)·Q3 2025 Earnings Summary