With a market capitalization of only $307 million, Esquire Financial (ESQ) is the second-smallest stock recommended in our model portfolio, notes Richard Moroney, in his specialized small-cap advisory service, Upside.
Moreover, it operates just one branch office in Jericho, New York. But size can be deceiving. The fast-growing bank is a leading provider of services to law firms, including custom loan, deposit, and payment-processing solutions to litigation experts and plaintiffs.
A full-service commercial bank, Esquire also serves retail customers in New York and small businesses across the U.S. The bank grew March-quarter earnings per share 25% to $0.66, topping the single estimate by a penny. Revenue rose 21% to $17 million.
During the quarter, total assets jumped 24%, fueled by a 27% increase in deposits. Excluding paycheck-protection loans, total loans grew 31%. Net interest margin (a measure of lending profitability) was a healthy 4.43%.
For 2022, Wall Street expects per-share earnings of $2.94, implying 39% growth. The consensus for next year is $3.67, up 25%. Esquire is a rapidly growing company trading at a discount valuation.
The stock’s Overall score of 96 (out of 100) ranks it near the top of the 341 regional banks in our research universe. Esquire earns scores above 90 in Momentum, Financial Strength, and Earnings Estimates. The stock is being initiated as a Buy.