Esquire Financial Holdings, Inc. Fair Value Disclosure
NOTE 13 — Fair Value Measurements
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values.
Level 1 — Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
Level 2 — Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3 — Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.
For available-for-sale securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2).
Assets and liabilities measured at fair value on a recurring basis are summarized below:
Fair Value Measurements Using | |||||||||
Quoted Prices | Significant | Significant | |||||||
| (Level 1) | | (Level 2) | | (Level 3) | ||||
December 31, 2025 | |||||||||
Assets | |||||||||
Securities available-for-sale | |||||||||
Mortgage-backed securities – agency | $ | — | $ | 85,695 | $ | — | |||
CMOs – agency | — | 160,810 | — | ||||||
Total available-for-sale | $ | — | $ | 246,505 | $ | — | |||
December 31, 2024 | |||||||||
Assets | |||||||||
Securities available-for-sale | |||||||||
Mortgage-backed securities – agency | $ | — | $ | 85,952 | $ | — | |||
CMOs – agency | — | 155,794 | — | ||||||
Total available-for-sale | $ | — | $ | 241,746 | $ | — | |||
There were no transfers between Level 1 and Level 2 during the year ended December 31, 2025.
Estimated Fair Value of Financial Instruments
Fair value estimates are made at specific points in time and are based on existing on-and off-balance sheet financial instruments. Such estimates are generally subjective in nature and dependent upon a number of significant assumptions associated with each financial instrument or group of financial instruments, including estimates of discount rates, risks associated with specific financial instruments, estimates of future cash flows, and relevant available market information. Changes in assumptions could significantly affect the estimates. In addition, fair value estimates do not reflect the value of anticipated future business, premiums or discounts that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument, or the tax consequences of realizing gains or losses on the sale of financial instruments.
The Company used the following method and assumptions in estimating the fair value of its financial instruments:
Debt Securities: The fair values for debt securities are determined by quoted market prices in active markets, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2), using matrix pricing. Matrix pricing is a mathematical technique commonly used to price debt securities that are not actively traded, values debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities with observable transactions (Level 2 inputs).
The following table presents the carrying amounts and fair values (represents exit price) of the Company’s financial instruments not carried at fair value:
Fair Value Measurement at December 31, 2025, Using: | |||||||||||||||
Carrying | |||||||||||||||
| Value | | (Level 1) | | (Level 2) | | (Level 3) | | Total | ||||||
(In thousands) | |||||||||||||||
Financial Assets: | |||||||||||||||
Cash and cash equivalents | $ | 235,887 | $ | 235,887 | $ | — | $ | — | $ | 235,887 | |||||
Securities, held-to-maturity | 60,193 | — | 55,500 | — | 55,500 | ||||||||||
Securities, restricted, at cost | 3,173 | N/A | N/A | N/A | N/A | ||||||||||
Loans held for investment, net | 1,734,405 | — | — | 1,710,581 | 1,710,581 | ||||||||||
Accrued interest receivable | 12,640 | — | 1,147 | 11,493 | 12,640 | ||||||||||
Financial Liabilities: | |||||||||||||||
Time deposits | 6,172 | — | 6,146 | — | 6,146 | ||||||||||
Demand and other deposits | 2,056,835 | 2,056,835 | — | — | 2,056,835 | ||||||||||
Secured borrowings | 40 | — | — | 40 | 40 | ||||||||||
Accrued interest payable | 1 | — | 1 | — | 1 | ||||||||||
Fair Value Measurement at December 31, 2024, Using: | |||||||||||||||
Carrying | |||||||||||||||
| Value | | (Level 1) | | (Level 2) | | (Level 3) | | Total | ||||||
(In thousands) | |||||||||||||||
Financial Assets: | |||||||||||||||
Cash and cash equivalents | $ | 126,329 | $ | 126,329 | $ | — | $ | — | $ | 126,329 | |||||
Securities, held-to-maturity | 68,660 | — | 60,931 | — | 60,931 | ||||||||||
Securities, restricted, at cost | 3,034 | N/A | N/A | N/A | N/A | ||||||||||
Loans held for investment, net | 1,376,042 | — | — | 1,351,736 | 1,351,736 | ||||||||||
Accrued interest receivable | 10,124 | — | 1,139 | 8,985 | 10,124 | ||||||||||
Financial Liabilities: | |||||||||||||||
Time deposits | 14,104 | — | 14,083 | — | 14,083 | ||||||||||
Demand and other deposits | 1,628,132 | 1,628,132 | — | — | 1,628,132 | ||||||||||
Secured borrowings | 42 | — | — | 42 | 42 | ||||||||||
Accrued interest payable | 25 | — | 25 | — | 25 | ||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 13, 2026 | Showing above |
| 2024 | Mar 17, 2025 | |
| 2023 | Mar 29, 2024 | |
| 2022 | Mar 27, 2023 | |
| 2021 | Mar 11, 2022 | |
| 2020 | Mar 19, 2021 | |
| 2019 | Mar 12, 2020 | |
| 2018 | Mar 14, 2019 | |
| 2017 | Mar 29, 2018 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.