Esquire Financial Holdings, Inc. Transferring the NFL Legacy Consumer Loans Portfolio to Loans Held for Sale

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Posted: October 22, 2021 at 8:30 a.m. EDT|Update: 2 hours ago

JERICHO, NY, 22 October 2021 / PRNewswire / – Esquire Financial Holdings, Inc. (NASDAQ: ESQ) (the “Company”), the financial holding company of Esquire Bank, National Association (“Esquire Bank”), today announced that as of of September 29, 2021, it reclassified its portfolio of NFL consumer loans (“loans” or “assets”) totaling $ 23.6 million loans held for sale, generating a pre-tax charge of a total amount $ 3.4 million ($ 2.5 million excluding taxes), or $ 0.31 per diluted share. From September 30, 2021, the fair value of these loans held for sale was approximately $ 14.2 million on the basis of an independent third party evaluation. This accounting reclassification to held for sale reflects management’s intention to sell these assets to a short-term Fund.

After September 30, 2021, the Company entered into a term sheet, subject to agreement on final legal documents, to sell the loans to a third party sponsored entity or Fund while retaining approximately 90% non-controlling economic interest in the Fund. The Company intends to pay the independent promoter of the Fund or its designated manager a fee for the management of the Fund. It is expected that the existence of the Fund will end within 7 years.

Excluding the impact of the aforementioned fair value charge, the Company expects its third quarter 2021 results release and associated performance measures to be in line with consensus estimates, reflecting positive quarterly trends. to the other. This charge has minimal impact on the Company’s capital and related capital ratios. We also expect our loan loss reserve at total loan levels to return to pre-pandemic levels.

“The duration of the NFL loan portfolio has grown over the years due to revisions to various claims administration protocols, the continuing effects of the pandemic, revisions to qualified physician requirements and now the recent controversial use of race-based standards on former NFL players ‘concussion claims,’ said Andrew C. Sagliocca, President and CEO. “Due to the effects of these recent racial normalization claims on the duration of these loans, we have chosen to sell our NFL assets while retaining a non-controlling economic interest in an effort to match the extended duration of the loans. concussion claims of our NFL borrowers with that of their loans. “

As stated in Law360 on October 15, 2021, “Racial normalization is a type of statistical manipulation used in neuropsychological testing, in which black players are assumed to start with lower baseline cognitive functioning than white players. The NFL said racial standards were initially used in neuropsychology to stop bias in testing, but critics allege that its use in concussion makes it more difficult for black players to show the cognitive decline necessary to receive uncapped settlement fund payments. ”Au 20 October 2021, the New York Times reported that an agreement was filed with the court stating that no racial standard or racial demographic estimate – whether black or white – should be used in the settlement program and that neither party can appeal against ‘a claim based on breed or use of breed standards. A panel of experts will develop new standards that will apply to all future neuropsychological tests under the program, all claims that have yet to be resolved, and all claims currently on appeal in which racial standards or racial demographic estimates may be involved. . Finally, the new retrospective rating will apply to cases where no impairment has been determined, but black standards have been applied during testing; all dementia claims that have been refused and to which black standards have been applied; or claims that were denied or reduced because the doctor did not enforce black race standards. The deal is pending court approval.

“Once this agreement is approved, the claims administrator must adopt new protocols for all claimants prospectively and retrospectively and reassess all claims under the new protocols, which will materially extend the resolution and final payment of those claims. “, said Andrew C. Sagliocca. “This deal is long overdue as the breed normalization claims date back to at least August 2020, clearly demonstrating the delays that have been involved in addressing this and other issues in the NFL concussion settlement. The company believes that the majority of its NFL membership assets will be resolved favorably during this extended period using the Fund as a vehicle to achieve its goal. “

About Esquire Financial Holdings, Inc.

Esquire Financial Holdings, Inc. is a financial holding company headquartered in Jericho, New York, with a branch at Jericho, New York and an administrative office at Boca Raton, Florida. Its wholly-owned subsidiary, Esquire Bank, National Association, is a full-service commercial bank dedicated to serving the financial needs of the litigation industry and small businesses nationwide, as well as commercial and retail clients in the new York Metropolitan area. The bank offers tailored payment and finance processing solutions to the litigation community and their clients, as well as dynamic and flexible payment processing solutions to small business owners. For more information, visit www.esquirebank.com.

Caution regarding forward-looking statements

This press release includes “forward-looking statements” relating to the future results of the Company. Forward-looking statements are subject to many risks and uncertainties, including, but not limited to: changes in business plans when circumstances warrant; changes in economic, trade and general political conditions, including changes in financial markets; and other risks detailed in the “Caution Regarding Forward-Looking Statements”, “Risk Factors” and other sections of the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission. The forward-looking statements included in this press release are not guarantees of future events, and that actual events may differ materially from those made or suggested by the forward-looking statements. Forward-looking statements can generally be identified by the use of forward-looking terminology such as “may”, “could”, “should”, “could”, “could”, “predict”, “possible”, “believe”, “Expect”, “attribute”, “continue”, “will”, “anticipate”, “seek”, “estimate”, “intend”, “plan”, “plan”, “objective” , “Goal”, “perspective”, “aim,” “would”, “annualized” and “perspective”, or similar terminology. In addition, given its continuous and dynamic nature, it is difficult to predict the total impact of the COVID-19 outbreak on our business. The extent of this impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and reduced and when and how the economy can be reopened. Due of the COVID-19 pandemic and the adverse local and national economic consequences that result from it, we could be exposed to any of the following risks, each of which could have a material adverse effect on our business, financial condition, liquidity and results of operations: Demand for our products and services may decline, making it difficult to grow assets and income; if the economy is unable to remain significantly reopened and higher unemployment levels continue for an extended period of time, delinquencies on loans, problem assets and foreclosures may increase; loan guarantees, especially real estate, can lose value; our allowance for loan losses may increase if borrowers experience financial difficulty; the equity and liquidity of loan guarantors may decline, compromising their ability to honor their commitments to us; and our cybersecurity risks are increased due to the increase in the number of employees working remotely. All forward-looking statements presented here are made only as of the date of this press release, and the Company assumes no obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unforeseen events, or otherwise, except as required by law.

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SOURCE Esquire Financial Holdings, Inc.

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