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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>As filed with
the Securities and Exchange Commission on May 31, 2017</B></FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: right"><FONT STYLE="font-size: 8pt"><B>Registration
No. 333-_____</B></FONT></P>

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<!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin-top: 3pt; margin-bottom: 0"><DIV STYLE="font-size: 1pt; border-top: Black 2pt solid; border-bottom: Black 1pt solid; width: 100%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>UNITED
STATES SECURITIES AND EXCHANGE COMMISSION</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>WASHINGTON,
D.C. 20549</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>FORM S-1</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>REGISTRATION
STATEMENT UNDER THE</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>SECURITIES
ACT OF 1933</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 14pt"><B>ESQUIRE FINANCIAL
HOLDINGS, INC.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt">(Exact Name of
Registrant as Specified in Its Charter)</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <TD STYLE="width: 33%; text-align: center"><FONT STYLE="font-size: 8pt"><B>Maryland</B></FONT></td>
    <TD STYLE="width: 34%; text-align: center"><FONT STYLE="font-size: 8pt"><B>6712</B></FONT></td>
    <TD STYLE="width: 33%; text-align: center"><FONT STYLE="font-size: 8pt"><B>27-5107901</B></FONT></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt">(State or other jurisdiction of</FONT></td>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt">(Primary Standard Industrial</FONT></td>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt">(I.R.S. Employer</FONT></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt">incorporation or organization)</FONT></td>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt">Classification Code Number)</FONT></td>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt">Identification Number)</FONT></td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>100 Jericho
Quadrangle, Suite 100</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Jericho, New
York 11753</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>(516) 535-2002</B><BR>
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant&rsquo;s Principal Executive Offices)</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Andrew C. Sagliocca</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>President and
Chief Executive Officer</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>100 Jericho
Quadrangle, Suite 100</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Jericho, New
York 11753</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>(516) 535-2002</B><BR>
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Copies to:</B></FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <TD STYLE="width: 50%"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>John
        J. Gorman, Esq.</B></FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Gary
        A. Lax, Esq.</B></FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Luse
        Gorman, PC</B></FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>5335
        Wisconsin Avenue, N.W., Suite 780</B></FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Washington,
        D.C. 20015</B></FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>(202)
        274-2000</B></FONT></P></td>
    <TD STYLE="width: 50%"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 5.4pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>Craig
        D. Miller, Esq.</B></FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 5.4pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>Katherine
        J. Blair, Esq.</B></FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 5.4pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>Manatt,
        Phelps &amp; Phillips, LLP.</B></FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 5.4pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>One
        Embarcadero Center, 30th Floor</B></FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 5.4pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>San
        Francisco, CA 94111</B></FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 5.4pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>(415)
        291-7400</B></FONT></P></td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><B>Approximate date of commencement of proposed
sale to the public: </B>As soon as practicable after this registration statement becomes effective.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">If any of the securities being registered on this
Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following
box: <FONT STYLE="font-family: Wingdings">&uml;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">If this Form is filed to register additional shares
for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering: <FONT STYLE="font-family: Wingdings">&uml;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">If this Form is a post-effective amendment filed
pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number
of the earlier effective registration statement for the same offering: <FONT STYLE="font-family: Wingdings">&uml;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">If this Form is a post-effective amendment filed
pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number
of the earlier effective registration statement for the same offering: <FONT STYLE="font-family: Wingdings">&uml;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company.
See the definitions of &ldquo;large accelerated filer,&rdquo; &ldquo;accelerated filer,&rdquo; &ldquo;smaller reporting company&rdquo;
and &ldquo;emerging growth company&rdquo; in Rule 12b-2 of the Exchange Act.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" ALIGN="CENTER" STYLE="font: 12pt Times New Roman, Times, Serif; width: 80%; border-collapse: collapse">
<tr style="vertical-align: top">
    <TD STYLE="width: 25%; text-align: justify"><font style="font-size: 10pt">Large accelerated filer</font></td>
    <TD STYLE="width: 25%; text-align: justify"><font style="font-family: Wingdings; font-size: 10pt">&uml;</font></td>
    <TD STYLE="width: 30%; text-align: justify"><font style="font-size: 10pt">Accelerated filer</font></td>
    <TD STYLE="width: 20%; text-align: justify"><font style="font-family: Wingdings; font-size: 10pt">&uml;</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: justify"><font style="font-size: 10pt">Non-accelerated filer</font></td>
    <TD STYLE="text-align: justify"><font style="font-family: Wingdings; font-size: 10pt">&uml;</font></td>
    <TD STYLE="text-align: justify"><font style="font-size: 10pt">Smaller reporting company</font></td>
    <TD STYLE="text-align: justify"><font style="font-family: Wingdings; font-size: 10pt">x</font></td></tr>
<tr style="vertical-align: top">
    <TD COLSPAN="2" STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">(Do not check if a smaller reporting company)</FONT></td>
    <TD STYLE="text-align: justify"><font style="font-size: 10pt">Emerging growth company</font></td>
    <TD STYLE="text-align: justify"><font style="font-family: Wingdings; font-size: 10pt">x</font></td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">If an emerging growth company, indicate by
check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided to Section 7(a)(2)(B) of the Securities Act. <FONT STYLE="font-family: Wingdings">&uml;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>CALCULATION OF REGISTRATION FEE</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 75%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Title
    of each class of securities to be registered</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Proposed
    maximum</B><br> <B>aggregate offering</B><br> <B>price <SUP>(1)(2)</SUP></B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amount
    of<BR> registration fee</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%; text-align: justify"><FONT STYLE="font-size: 10pt">Common Stock, $0.01 par value per share</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">40,250,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">4,665</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(1)</TD><TD STYLE="text-align: left">Estimated solely for purposes of calculating the amount of the registration fee in accordance with
Rule 457(o) of the Securities Act of 1933, as amended.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(2)</TD><TD STYLE="text-align: left">Includes the aggregate offering price of additional shares that the underwriter has the option to
purchase.&nbsp;</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>The registrant hereby amends this registration
statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment
which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange
Commission, acting pursuant to said Section 8(a), may determine.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B></B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>


<P STYLE="margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; background-color: white; color: #FF4040"><B>The information in this
preliminary prospectus is not complete and may be changed. We and the selling stockholders may not sell these securities until
the Registration Statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an
offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white; color: #FF4040"><B>SUBJECT
TO COMPLETION, DATED MAY 31, 2017</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>PRELIMINARY PROSPECTUS </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>[<FONT STYLE="font-family: Symbol">&middot;</FONT>]
Shares</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><IMG SRC="t1701677_s1logo.jpg" ALT=""></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>COMMON STOCK</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">This is the initial public
offering of Esquire Financial Holdings, Inc., <FONT STYLE="background-color: white">the holding company for Esquire Bank, National
Association, a national banking association headquartered in </FONT>Jericho, New York<FONT STYLE="background-color: white">.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We are offering [<FONT STYLE="font-family: Symbol">&middot;</FONT>]
shares of common stock and the selling stockholders are offering [<FONT STYLE="font-family: Symbol">&middot;</FONT>] shares of
our common stock. We will not receive any proceeds from the sales of shares by the selling stockholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Prior to this offering,
there has been no established public market for our common stock. We intend to apply to list our common stock on the NASDAQ Capital
Market under the symbol &ldquo;ESQ.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We anticipate that the
public offering price of our common stock will be between $[<FONT STYLE="font-family: Symbol">&middot;</FONT>] and $[<FONT STYLE="font-family: Symbol">&middot;</FONT>]
per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="background-color: white">We
are an &ldquo;emerging growth company&rdquo; as defined in the Jumpstart Our Business Startups Act of 2012 and, as such, have elected
to comply with certain reduced public company disclosure standards.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><B>Investing in our common
stock involves risk. See &ldquo;Risk Factors&rdquo; beginning on page 12 of this prospectus to read about factors you should
consider before investing in our common stock.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></P>

<!-- Field: Rule-Page --><DIV ALIGN="CENTER" STYLE="margin-top: 3pt; margin-bottom: 3pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 25%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.75in">
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt">Per
    Share</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt">Total</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%; font-weight: bold">Public offering price</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold">Underwriting discounts(1)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Proceeds to us, before expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Proceeds to the selling stockholders, before expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-align: justify; text-indent: -0.25in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-align: justify; text-indent: -0.25in"></P>

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<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in">(1)</TD><TD STYLE="text-align: justify"><FONT STYLE="background-color: white">See &ldquo;Underwriting&rdquo; for a description of all underwriting
compensation payable and expense reimbursement in connection with this offering.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="background-color: white">The
underwriter has an option to purchase up to an additional </FONT>[<FONT STYLE="font-family: Symbol">&middot;</FONT>]<FONT STYLE="background-color: white">
shares from us at the public offering price, less the underwriting discount, within 30 days from the date of this prospectus. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><B>Neither the Securities
and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><B>The shares of our common
stock in this offering are not savings accounts, deposits or other obligations of any bank and are not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other governmental agency. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="background-color: white">The
underwriter expects to deliver the shares of our common stock against payment on or about [&bull;], 2017.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>




<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0"><IMG SRC="t1701677_s1logo1.jpg" ALT=""></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">The date of this prospectus is [<FONT STYLE="font-family: Symbol">&middot;</FONT>],
2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B><A NAME="TableOfContents"></A>TABLE OF CONTENTS </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="width: 90%"><A HREF="#a_001">SUMMARY</A></TD>
    <TD STYLE="width: 10%; text-align: right; vertical-align: bottom">1</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><A HREF="#a_002">RISK FACTORS</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">12</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><A HREF="#a_003">CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">32</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><A HREF="#a_004">USE OF PROCEEDS</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">35</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><A HREF="#a_005">CAPITALIZATION</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">36</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><A HREF="#a_006">DILUTION</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">37</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><A HREF="#a_007">DIVIDEND POLICY</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">39</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><A HREF="#a_008">SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">40</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><A HREF="#a_009">MANAGEMENT&rsquo;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">43</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><A HREF="#a_010">BUSINESS</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">69</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><A HREF="#a_011">SUPERVISION AND REGULATION</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">84</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><A HREF="#a_012">MANAGEMENT</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">94</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><A HREF="#a_013">EXECUTIVE COMPENSATION</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">101</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><A HREF="#a_014">CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">108</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><A HREF="#a_015">PRINCIPAL AND SELLING STOCKHOLDERS</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">109</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><A HREF="#a_016">DESCRIPTION OF CAPITAL STOCK</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">111</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><A HREF="#a_017">SHARES ELIGIBLE FOR FUTURE SALE</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">115</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><A HREF="#a_018">CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES&nbsp;&nbsp;FOR NON-U.S. HOLDERS OF COMMON STOCK</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">117</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><A HREF="#a_019">UNDERWRITING</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">120</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><A HREF="#a_020">LEGAL MATTERS</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">123</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><A HREF="#a_021">EXPERTS</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">123</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><A HREF="#a_022">WHERE YOU CAN FIND ADDITIONAL INFORMATION</A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">123</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><A HREF="#a_023"><FONT STYLE="font-size: 10pt">INDEX TO CONSOLIDATED FINANCIAL STATEMENTS</FONT></A></TD>
    <TD STYLE="text-align: right; vertical-align: bottom"><FONT STYLE="font-size: 10pt">F-1</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>About This Prospectus</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">You should rely only on the information contained
in this prospectus or in any free writing prospectus that we authorize to be delivered to you. We, the selling stockholders and
the underwriter have not authorized anyone to provide you with different or additional information. We, the selling stockholders
and the underwriter are not making an offer of these securities in any jurisdiction where the offer is not permitted. You should
not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this
prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Unless we state otherwise or the context otherwise
requires, references in this prospectus to &ldquo;we,&rdquo; &ldquo;our,&rdquo; &ldquo;us&rdquo; or &ldquo;the Company&rdquo; refer
to Esquire Financial Holdings, Inc., a Maryland corporation, and its subsidiary Esquire Bank, National Association, which we sometimes
refer to as &ldquo;Esquire Bank,&rdquo; &ldquo;the Bank&rdquo; or &ldquo;our Bank.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Market and Industry Data</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Within this prospectus, we reference certain
market, industry and demographic data and other statistical information. We have obtained this data and information from various
independent, third party industry sources and publications. Nothing in the data or information used or derived from third party
sources should be construed as advice. Some data and other information are also based on our good faith estimates, which are derived
from our review of internal surveys and independent sources. We believe that these external sources and estimates are reliable,
but have not independently verified them. Statements as to our market position are based on market data currently available to
us. Although we are not aware of any misstatements regarding the economic, employment, industry and other market data presented
herein, these estimates involve inherent risks and uncertainties and are based on assumptions that are subject to change.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Implications of Being an Emerging Growth
Company</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">As a company with less than $1.07&nbsp;billion
in revenue during our last fiscal year, we qualify as an &quot;emerging growth company&quot; under the Jumpstart Our Business Startups
Act of 2012, or the JOBS Act. An emerging growth company may take advantage of reduced reporting requirements and is relieved of
certain other significant requirements that are otherwise generally applicable to public companies. As an emerging growth company:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>we may present as few as two years of audited financial statements and two years of related management discussion and analysis
of financial condition and results of operations;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>we are exempt from the requirement to obtain an attestation and report from our auditors on management's assessment of our
internal control over financial reporting under the Sarbanes-Oxley Act of 2002;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: windowtext">&middot;</FONT></TD><TD>we are permitted to provide reduced disclosure regarding our executive compensation arrangements pursuant to the rules applicable
to smaller reporting companies, which means we do not have to include a compensation discussion and analysis and certain other
disclosures regarding our executive compensation<FONT STYLE="color: windowtext">; and&nbsp;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: windowtext">&middot;</FONT></TD><TD>we are not required to hold non-binding advisory votes on executive compensation or golden parachute arrangements<FONT STYLE="color: windowtext">.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In addition to the relief described above, the
JOBS Act permits us an extended transition period for complying with new or revised accounting standards affecting public companies.
We have irrevocably determined to not take advantage of this extended transition period, which means that the financial statements
included in this prospectus, as well as any financial statements that we file in the future, will be subject to all new or revised
accounting standards generally applicable to public companies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In this prospectus we have elected to take advantage
of the reduced disclosure requirements relating to executive compensation, and in the future we may take advantage of any or all
of these exemptions for so long as we remain an emerging growth company. We will remain an emerging growth company until the earliest
of (i) the end of the fiscal year during which we have total annual gross revenues of $1.07 billion or more, (ii) the end of the
fiscal year following the fifth anniversary of the completion of this offering, (iii) the date on which we have, during the previous
three-year period, issued more than $1.0&nbsp;billion in non-convertible debt and (iv) the date on which we are deemed to be a
&ldquo;large accelerated filer&rdquo; under the Securities Exchange Act of 1934, as amended.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; background-color: white">&nbsp;</P>


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><A NAME="a_001"></A>SUMMARY</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><I>This summary highlights
selected information contained in greater detail elsewhere in this prospectus. This summary may not contain all of the information
that you should consider before investing in our securities. You should carefully read this entire prospectus, including the sections
entitled &ldquo;Risk Factors&rdquo; and &ldquo;Management&rsquo;s Discussion and Analysis of Financial Condition and Results of
Operations&rdquo; and our consolidated financial statements and the notes related thereto before making an investment decision.
Some of the statements in this prospectus constitute forward-looking statements. See &ldquo;Cautionary Note Regarding Forward-Looking
Statements.&rdquo; </I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Our Company </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We are a bank holding company headquartered
in Jericho, New York and registered under the Bank Holding Company Act of 1956, as amended (the &ldquo;BHC Act&rdquo;). Through
our wholly owned bank subsidiary, Esquire Bank, National Association, we are a full service commercial bank dedicated to serving
the financial needs of the legal and small business communities on a national basis, as well as commercial and retail customers
in the New York metropolitan market. We offer tailored products and solutions to the legal community and their clients as well
as dynamic and flexible merchant services solutions to small business owners, both on a national basis. We also offer traditional
banking products for businesses and consumers in our local market area (a subset of the New York metropolitan market). We believe
these activities, primarily anchored by our legal community focus, generate a stable source of low cost core deposits and a diverse
asset base to support our overall operations. Our commercial and consumer loans tailored to the litigation market (&ldquo;Attorney-Related
Loans&rdquo;) enhance our overall yield on our loan portfolio, enabling us to earn attractive risk-adjusted net interest margins.
Additionally, our merchant processing activities have generated a relatively stable source of fee income. We believe our unique
and dynamic business model distinguishes us from other banks and non-bank financial services companies in the markets in which
we operate as demonstrated by comparing our performance metrics for the three months ended March 31, 2017 and 2016 as well as our
year ended 2016 and 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">For the three months ended March 31, 2017 and
2016:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Our net income increased 26.8% to $815,000 or $0.16 per diluted share.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">We had a net interest margin of 4.23%, stabilized by a low cost of
funds of 0.15% on our core deposits.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Our loans increased 23.0%, or $54.3 million, to $290.6 million, with
no non-performing loans and solid asset quality metrics.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Our noninterest income increased 22.0% to $1.2 million, which represented
21.9% of our total revenue for the three months ended March 31, 2017, primarily driven by our merchant services platform.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">As of March 31, 2017, our total assets, loans, deposits and stockholders&rsquo;
equity totaled $438.1 million, $290.6 million, $383.4 million and $53.2 million, respectively.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in">For the years ended December 31, 2016 and 2015:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Our net income increased 140.8% to $2.8 million, or $0.55 per diluted
share.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">We had a net interest margin of 4.25%, an increase from 3.74%, stabilized
by a low cost of funds of 0.16% on our deposits.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Our loans increased 24.1%, or $54.1 million, to $278.6 million, with
no non-performing loans and solid asset quality metrics.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Our noninterest income increased 40.2% to $4.1 million, which represented
20.9% of our total revenue for the year ended December 31, 2016, primarily driven by our growing merchant services platform.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">As of December 31, 2016, our total assets, loans, deposits and stockholders&rsquo;
equity totaled $424.8 million, $278.6 million, $370.8 million and $52.2 million, respectively.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Both 2015 and 2016 were transformational years
for the Company, due in part to the successful execution of our unique and dynamic business model. We believe our ongoing commitment
to the litigation and small business communities have been, and should continue to be, the foundation for our success. In August
2015, we closed our private placement offering of common stock and preferred stock that began in 2014, raising net proceeds totaling
$17.2 million and successfully converted Esquire Financial Holdings, Inc. and Esquire Bank from a savings and loan holding company
and savings bank to a bank holding company and national bank, respectively. We believe that the additional capital, coupled with
the conversion to a national bank, has and should continue to enhance our commercial loan growth in the legal industry and business
communities we serve.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We remain true to our commitment to serve the
litigation community and our commercial customers through our tailored and innovative products and solutions. We believe Esquire
Bank&rsquo;s approach to the legal community is simple yet effective <I>&ndash; </I>we<I> </I>listen to the customer&rsquo;s needs
and tailor products and services around those needs. Our management team includes attorneys and bankers who have serviced the legal
community throughout their careers, which is a differentiating factor and key to our robust attorney network. This model continues
to set us apart from other institutions that offer a &ldquo;one product fits all&rdquo; model. Our relationships within the litigation
community are a key contributor to our loan growth, strong loan yields, and low cost core deposits. The litigation community represented
more than 70% of our deposit base at March 31, 2017. In addition to our lending and deposit gathering activities, we have also
remained steadfast in growing our merchant services platform. We provide dynamic and flexible merchant services solutions to small
business owners. Our merchant services platform has grown to approximately 13,000 small businesses at March 31, 2017, which generated
most of our noninterest income and represented 21.9% of our revenue for the three months ended March 31, 2017 and 20.9% of our
revenue for the year ended December 31, 2016. We believe our merchant services platform represents a significant opportunity for
future growth in fee income, core deposits and enhanced lending opportunities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our low cost core deposits (deposits, excluding
time deposits), representing our primary funding source for loan growth, totaled $360.7 million at March 31, 2017 resulting in
a total cost of funds of 0.15%. These stable low cost funds are driven by our attorney operating and escrow deposits, representing
more than 70% of our total deposit base at March 31, 2017. We intend to continue to prudently manage growth in deposits, utilizing
customer sweep programs for our mass tort and class action business banking programs. We do not have traditional &ldquo;brick and
mortar&rdquo; branches to support our deposit growth. Instead, we rely on our robust attorney network to gather deposits and our
customers utilize on-line cash management technology to manage their operating and escrow accounts as well as their business banking
needs across the country. We believe the lack of branch infrastructure coupled with our strong net interest margin and growth will
continue to drive our efficiency ratio below the 73% reported for the three months ended March 31, 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">With a growing and generally unseasoned loan
portfolio, our credit risk may continue to increase and our future performance could be adversely affected; however, we have invested
in and developed underwriting and credit management processes tailored to each of the products we offer in order to minimize these
risks. We are committed to continuing to invest in and develop our underwriting and credit management processes to ensure our
asset quality remains high and we minimize our credit risk. At March 31, 2017, the average age of our loan portfolio was 2.10
years and we currently do not have any non-performing loans. See &ldquo;Risk Factors&mdash;Our loan portfolio is unseasoned,&rdquo;
beginning on page 12.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Esquire Bank, National Association is subject
to comprehensive regulation and examination by the Office of the Comptroller of the Currency (&ldquo;OCC&rdquo;) and Esquire Financial
Holdings, Inc. is supervised by the Board of Governors of the Federal Reserve System (&ldquo;FRB&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Our Business Strategy</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Esquire Bank has positioned itself as a unique
provider of financial services and products to the legal community, developing a strong brand and reputation with attorneys and
their firms. The legal community that we</P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">serve consists of law firms that litigate mass torts, class actions,
commercial, employment, product liability, personal injury and other litigation cases, as well as individual attorneys and their
clients (plaintiffs involved in the litigation who are the recipients of the settlements or judgments). According to the Towers
Watson 2011 Update on U.S. Tort Cost Trends, the U.S. tort system paid out $264.6 billion in commercial and personal tort costs
in 2010. The same report states that &ldquo;since 1950, growth in tort costs [commercial and personal] has exceeded growth in
GDP by an average of approximately two percentage points.&rdquo; However, tort cost growth has generally lagged GDP growth in
the last five years covered by the Towers Watson report and the Company has not conducted any independent research to determine
if the value of tort actions in 2010 remains indicative of the value of tort actions in 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Law firms are typically compensated on a contingent
basis based on a percentage of the gross settlement amounts, ranging from 20%-40% of the gross settlement. This market has traditionally
been fragmented with deposit services offered by banks and lending services offered by finance companies (non-FDIC insured entities).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Since commencing operations, we have leveraged
the strong business relationships that our founders, directors, stockholders, customers and officers have in the legal community,
and believe we have created a unique distribution network. We have had certain informal affiliations with numerous national and
state trial associations, including but not limited to the American Association of Justice (AAJ), the New York State Trial Lawyers
Association (NYSTLA), the Consumer Attorneys of California (CAOC), the Florida Association of Justice (FAJ) and the Pennsylvania
Association for Justice (PAJ). These organizations represent licensed trial attorneys across their states and nationwide. These
informal affiliations, coupled with our strong business relationships, should help to raise awareness of Esquire Bank&rsquo;s products
and services throughout the legal community. Our goal is to position Esquire Bank as the premier &ldquo;one stop&rdquo; financial
services firm for this legal community. We believe we are one of the few banks in the United States that specifically supports
and has the expertise to understand the specialized financial services needs of the legal community, and have developed commercial
and consumer loan products and services to meet these needs. We provide specialized lending and depository services to participants
in the litigation industry on a national basis, including:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Plaintiff law firms - single event, mass tort, class action and worker&rsquo;s compensation firms.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Non-bank trustees - claims administrators, third party administrators and lien resolution firms administering mass tort or
class action settlements on behalf of the courts, court orders, plaintiff and/or defendant counsel.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Consumers - claimants in single event, mass tort and class action lawsuits as well as employees and partners of the law firms.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In addition to our lending capabilities, in
2012 we entered into the merchant services business as an acquiring bank and hired a senior manager with over 35 years of experience
to lead that business. As a Visa and MasterCard member, we provide merchant services for small businesses located throughout the
United States through relationships with third parties known as Independent Service Organizations (&ldquo;ISOs&rdquo;). ISOs provide
a source of protection against merchant losses through contractual liability for the acts and omissions of the merchants. These
liabilities can be satisfied from ISO and/or merchant reserves and monthly residual payments due to the ISO that are maintained
at Esquire Bank. To date, Esquire Bank has not incurred any losses from its merchant services activities. We entered into the merchant
processing business to diversify and strengthen our revenue stream by increasing noninterest income and to provide cross selling
opportunities for other business banking products and services. For the three months ended March 31, 2017, merchant processing
revenues were approximately $838,000 representing most of our noninterest income, which was 21.9% of our total revenue. For the
year ended December 31, 2016, merchant processing revenues were approximately $2.9 million representing most of our noninterest
income, which was 20.9% of our total revenue. At March 31, 2017, we serviced approximately 13,000 small businesses, and for the
three months ended March 31, 2017, we processed $787.7 million in card volume. We intend to continue to expand our merchant processing
business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Finally, we offer traditional commercial and
consumer lending and depository products in the New York metropolitan area with a focus on commercial, commercial real estate,
multifamily and 1-4 family residential loans.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">We control credit risk through both disciplined underwriting, as
well as active credit management processes and procedures. For more discussion on our lending activities, see &ldquo;Business&mdash;Lending
Activities.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Our Competitive Strengths</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We attribute our success to the following competitive
strengths:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Unique Distribution Network in Scalable
Industries</I></B>. We have developed a unique niche in the legal industry which represented $264.6 billion in commercial and personal
tort costs in 2010. We believe that our unique distribution network within the legal industry is derived from decades of experience
anchored by our founders, Board of Directors, stockholders, officers, customers and our affiliations with both state and national
trial associations. The legal community is our primary engine for current and future growth in low cost core deposits, commercial
loans and consumer loans. We believe the litigation industry has significant growth potential for us across the lending and depository
spectrum, as we represent a small portion of the total tort settlement market for each year that we have been in operation. While
we do face significant competition for Attorney-Related Loans, derived primarily from eight to ten nationally-oriented financial
companies that specialize in the litigation industry, we believe our relationships within the litigation community, our competitive
rates on loans and our ability to offer national, uniform deposit products, set us apart. Also, through our merchant services solutions
to small business owners, we processed approximately $3.6 billion in merchant transaction volume for the year ended December 31,
2016 and $787.7 million for the three months ended March 31, 2017. We believe we have the platform and the capacity to continue
to grow our merchant services business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Scalable Product Platforms Positioned
for Growth</I></B>. We have invested in people, processes and procedures in order to facilitate the recent growth in our key product
lines and position such product lines for additional growth in the future. We hired experienced management to establish unique
product lines, which have only recently become profitable on a run rate basis. We believe these unique product lines have significant
remaining growth potential. We also believe that the scalable platforms created by these investments position us for substantial
growth in our key product lines and have laid the groundwork for our ability to operate as a larger financial institution.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Diversified and Stable Business Model.</I></B>
The combination of our higher margin legal community focus for commercial banking (commercial loans, claimant/consumer loans and
core low cost deposits), fee-based small business focus in merchant services and our community banking focus in the New York metropolitan
area (commercial real estate and residential income producing lending) allows us to grow in varied economic conditions and business
cycles. Our merchant services platform is intended to provide a stable fee based income and a platform for small business loan
and deposit growth. Our New York metropolitan commercial real estate portfolio has historically provided a stable lending base
in our local market. Our commercial product lines enhance the overall yield of our loan portfolio and are offered on a nationwide
basis, helping us to mitigate our exposure to stagnant loan demand or yield compression in our community banking market. This model
also provides asset diversity and favorable cost of funds, especially when competing against the wholesale banks and non-bank finance
companies that offer similar commercial finance products. However, substantially all of our real estate loans and a majority of
our Attorney-Related Loans are concentrated in the New York metropolitan area and if negative economic conditions develop in the
United States as a whole or in the New York market, we could experience higher delinquencies and loan charge-offs, which would
reduce our net income and adversely affect our financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Focused Risk Mitigation Practices</I></B>.
We have developed underwriting and credit management processes tailored to each of the products we offer, allowing us to construct
a diversified asset portfolio including specialized markets not typically served by community banks. We believe that our industry
experience and product knowledge have allowed us to develop processes, procedures and structural features in connection with offering
specialized products that enable us to appropriately identify and mitigate the risks associated with these products and services.
We intend to increase our originations of commercial Attorney-Related Loans, which include working capital lines of credit, case
cost lines of credit, term loans to law firms, and post-settlement commercial and other commercial attorney-related loans (&ldquo;Commercial
Attorney-Related Loans&rdquo;) and these loans generally have more risk than 1-4 family residential mortgage loans and commercial
loans secured by real estate. However, we are focused on continuing to invest in our risk mitigation practices and leveraging our
product knowledge to ensure we minimize these credit risks while we continue to grow our loan portfolio.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Experienced Management Team</I></B>. Our
leadership team consists of senior managers with an average of over 20 years of experience in the banking and non-banking financial
services industries. The majority of our senior managers come from multi-billion dollar financial institutions. We believe the
experience, relationships, and entrepreneurial culture of our management team as well as our Board of Directors have been and will
continue to be key drivers of our growth. Our key leadership team includes:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif"><U>Dennis Shields, Executive Chairman of the Board</U>. Mr. Shields
is the Executive Chairman of the Board of Directors and was a founding organizer of Esquire Bank. Since its inception in 2000,
Mr. Shields has also served as Chief Executive Officer of Plaintiff Funding Corp. (dba LawCash), a New York-based specialty finance
company that provides financial services products to law firms and claimants. Since 2014, Mr. Shields has served as the Chairman
at YieldStreet, an online platform for alternative investments and he is also the Chairman of Keeps America, a company that works
with law firms, disability advocates, and third-party administrators to distribute settlement awards and government benefits to
clients through its prepaid card. Mr. Shields served as a lay member of the Grievance Committee to the Second and Eleventh Judicial
Departments appointed by presiding judge from 1996 to 2004 and previously served on the New York State Health Information and Quality
Improvement Committee. Mr. Shields has authored two books and is a frequent speaker in both the legal and finance community. </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif"><U>Andrew C. Sagliocca, President, Chief Executive Officer and Director</U>.&nbsp;
Mr. Sagliocca served as the Company&rsquo;s Chief Financial Officer when he joined Esquire Bank in February 2007. He became the
Chief Executive Officer in January 2009. Prior to joining Esquire Bank, Mr. Sagliocca was Senior Vice President and Corporate Controller
of North Fork Bank from 1999 to 2007. Mr. Sagliocca has more than 27 years of experience in the financial services industry.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif"><U>Eric S. Bader, Executive Vice President, Chief Financial Officer
and Treasurer</U>.&nbsp; Prior to his appointment as Executive Vice President in February 2011, Mr. Bader served as our Senior
Vice President, Chief Financial Officer and Treasurer since January 2009. Prior to this, Mr. Bader served as Esquire Bank&rsquo;s
Senior Vice President and Treasurer, since joining Esquire Bank in January 2008.&nbsp; Prior to joining Esquire Bank, Mr. Bader
was Vice President at Goldman Sachs and served as a Vice President and Investment Officer at North Fork Bank.&nbsp; Mr. Bader has
17 years of experience in the financial services industry.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif"><U>Ari P. Kornhaber, Executive Vice President, Director of Sales</U>.
Mr. Kornhaber has served as Director of Sales of Esquire Bank since 2013. From 2004 to 2013, Mr. Kornhaber served as National Marketing
Director at Plaintiff Funding Holding. Inc. (dba LawCash). Mr. Kornhaber has spoken on the subject of financing for lawyers, law
firms and their clients, and the ethics surrounding the same, at numerous seminars and conferences across the United States for
over 10 years.&nbsp; After receiving his law degree from Touro Law School in New York, Mr. Kornhaber was a practicing plaintiff&rsquo;s
lawyer in New York City with the law firm of Pariser and Vogelman, PC and was a trial attorney for the law firm of Napoli, Kaiser
and Bern, LLC, where he specialized in personal injury, medical malpractice and mass tort litigation.&nbsp;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif"><U>Fred Horn, Senior Vice President, Director of Merchant Services</U>.
Mr. Horn joined Esquire Bank in 2012 to start up a merchant services program in order to generate processing&nbsp;fee income and
increase demand deposits.&nbsp; Prior to joining Esquire Bank, Mr. Horn was Senior Vice President at Merrick Bank for 11 years
where he started and directed a merchant service program which became the sixteenth largest such program in the country. Mr. Horn
served for 25 years at Summit Bank, Princeton, New Jersey (now Bank of America), where he held a number of senior officer positions
including directing merchant services, an American Express, MasterCard and Visa credit card portfolio and a top 10 US Visa debit
card program.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Our Growth Strategy</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We believe that our model of community banking
with a focus on niche commercial products and merchant services provides us with differentiated advantages when compared to our
competitors, including a strong deposit</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">franchise, a more complete set of product offerings and the ability
to earn attractive risk-adjusted net interest margins. The pool of potential law firm customers is substantial, yet the specialized
lending markets that serve them remain highly fragmented. Many of our commercial loans are de novo products which we believe are
poised to capture additional market share as they mature. We will leverage our commercial law firm relationships to continue to
enhance and grow our claimant/consumer lending base, meeting the needs of the law firms&rsquo; customers. We expect to continue
capturing market share in the legal community because we provide both commercial and consumer clients with unique banking products
and services. Additionally, we plan to continue growing our merchant services platform for small businesses nationally, which we
expect will increase our fee income while offering lending and depository services to these businesses. Finally, we believe the
lack of a physical branch infrastructure and our strong balance sheet allows us to make investments in technology, personnel, marketing
and systems not available to non-bank commercial lenders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We market our loans along with other products
and services through a variety of channels. Fundamentally, we focus on a high-touch direct sales model, building long-term relationships
with our customers. Our sales officers actively solicit new and existing customers in the communities we serve. For our commercial
products, our sales personnel travel across the country to meet with our customers throughout the year. Importantly, while we seek
to ensure that the pricing on our loan products is competitive, we also attempt to distinguish ourselves on criteria other than
price, including service, industry knowledge and what we believe is a more complete value proposition than our competitors. We
believe that our suite of complementary commercial and consumer legal industry product options coupled with our on-line cash management
platform allow us to offer full-service banking relationships to customers and industries that have historically been served by
smaller non-bank commercial finance companies. It is our strategy to deepen our customer relationships and increase retention by
cross-marketing all of these products to our customers in an effort to be a &ldquo;one-stop&rdquo; financial services provider,
particularly in our legal industry niche.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Our Market Area </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We define the market area for our legal community
products as law firms practicing within the United States, United States territories and United States commonwealths, and we serve
the litigation industry on a nationwide basis. For traditional community banking products and services, our primary market area
is the New York metropolitan area, specifically Nassau and New York (Manhattan) Counties in New York and secondarily throughout
the state of New York.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We have established our niche in the litigation
market, which, according to the Towers Watson 2011 Update on U.S. Tort Cost Trends, was an approximately $264.6 billion market
in the United States in 2010, through the strategic development of a business model that understands our market's unique needs
and provides access to our target customers. <B> </B>We have designed unique, value added products and services for our current
and potential customers and created a distribution network with direct access to the market through the experience and networks
of our Board, Advisory Board, attorney stockholders and certain members of management. A number of our directors, Advisory Board
members and investors are well-known, influential market figures and active members of some of the leading litigation law firms
in the nation and national and state bar associations as well as other industry leading companies such as plaintiff financing and
structured settlement services. In addition, we have established relationships with key industry organizations such as New York
State Trial Lawyers Association, Consumer Attorneys of California, Florida Justice Association, and a number of other state trial
attorney associations. Through our current law firm clients and other relationships, we believe we have access to thousands of
trial attorneys.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our traditional community banking market area
has a diversified economy typical of most urban population centers, with the majority of employment provided by services, wholesale/retail
trade, finance/insurance/real estate (&ldquo;FIRE&rdquo;) and construction. Services account for the largest employment sector
across the two primary market area counties, while wholesale/retail trade accounts for the second largest employment sector in
Nassau and New York Counties. New York City is one of the premier financial centers in the world, and thus FIRE is the third largest
employment sector in New York County. As of June 30, 2016 <FONT STYLE="background-color: white">(the latest date for which information
is available)</FONT>, New York County&rsquo;s $1.0 trillion deposit market was much larger than the $69.8 billion deposit market
in Nassau County.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Risks Relating to Our Company and an Investment in Our Common
Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">An investment in our common stock involves
substantial risks and uncertainties. Investors should carefully consider all of the information in this prospectus, including
the detailed discussion of these and other risks under &quot;Risk Factors&quot; beginning on page 12, prior to investing
in our common stock. Some of the more significant risks include the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>We have a limited operating history and have recently experienced significant growth, which makes it difficult to forecast
our revenue and evaluate our business and future prospects;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Because we intend to continue to increase our commercial loans, our credit risk may increase;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>A substantial portion of our business is dependent on the prospects of the legal industry and changes in the legal industry
may adversely affect our growth and profitability;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>A substantial portion of our loan portfolio consists of multifamily real estate loans and commercial real estate loans, which
have a higher degree of risk than other types of loans;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>We expect to increase our originations of consumer loans, including post-settlement consumer and structured settlement loans,
and such loans generally carry greater risk than loans secured by owner-occupied, 1-4 family real estate, and these risks will
increase as we continue to increase originations of these types of loans;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>As a business operating in the financial services industry, our business and operations may be adversely affected in numerous
and complex ways by weak economic conditions;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>A substantial majority of our loans and operations are in New York, and therefore our business is particularly vulnerable to
a downturn in the New York City economy;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>We rely heavily on our management team, our board of directors and our advisory board members and our business could be adversely
affected by the unexpected loss of one or more of our officers or directors;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>We operate in a highly competitive industry and face significant competition from other financial institutions and financial
services providers, which may decrease our growth or profits;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>We face risks related to our operational, technological and organizational infrastructure;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>The occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents
could have a material adverse effect on our business, financial condition and results of operations;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Our business, financial condition, results of operations and future prospects could be adversely affected by the highly regulated
environment and the laws and regulations that govern our operations, corporate governance, executive compensation and accounting
principles, or changes in any of them; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>An active, liquid trading market for our common stock may not develop, and you may not be able to sell your common stock at
or above the public offering price, or at all.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Corporate Information</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our principal executive offices are located
at 100 Jericho Quadrangle, Suite 100, Jericho, New York 11753, and our telephone number at that address is (800) 996-0213. Our
website address is www.esquirebank.com. The information contained on our website is not a part of, or incorporated by reference
into, this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>The Offering</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 49%">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Common stock offered by us</B></P></TD>
    <TD STYLE="width: 3%">&nbsp;</TD>
    <TD STYLE="width: 48%"><FONT STYLE="font-size: 10pt">[<FONT STYLE="font-family: Symbol">&middot;</FONT>] shares</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt"><B>Common stock offered by the selling stockholders</B></FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">[<FONT STYLE="font-family: Symbol">&middot;</FONT>] shares</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt"><B>Underwriter&rsquo;s purchase option</B></FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">[<FONT STYLE="font-family: Symbol">&middot;</FONT>] shares from us</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt"><B>Common stock outstanding after completion of this offering</B></FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">[<FONT STYLE="font-family: Symbol">&middot;</FONT>] shares (or [<FONT STYLE="font-family: Symbol">&middot;</FONT>] shares if the underwriter exercises its purchase option in full). There are 66,985 shares of our Series B Non-Voting Preferred Stock (the &ldquo;Series B Preferred Stock&rdquo;) that will remain outstanding following completion of the offering.&nbsp;&nbsp;The Series B Preferred Stock is not convertible by the holder but is automatically convertible on a one for one basis into shares of our common stock under certain circumstances. For more information on the Series B Preferred Stock, please see &ldquo;Description of Capital Stock.&rdquo;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt"><B>Use of proceeds</B></FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">We estimate that the net proceeds to us from this offering, after deducting underwriting discounts and estimated offering expenses, will be approximately $[<FONT STYLE="font-family: Symbol">&middot;</FONT>] million (or approximately $[<FONT STYLE="font-family: Symbol">&middot;</FONT>] million if the underwriter exercises its option to purchase additional shares in full), based on an assumed public offering price of $[<FONT STYLE="font-family: Symbol">&middot;</FONT>] per share, which is the midpoint of the price range set forth on the cover of this prospectus. We intend to use the net proceeds that we receive from this offering to support the growth in Esquire Bank&rsquo;s loan portfolio, including the possibility of making larger loans due to the increased lending limits, to finance potential strategic acquisitions to the extent such opportunities arise and for other general corporate purposes, which could include other growth initiatives. We will not receive any proceeds from the sale of shares of our common stock by the selling stockholders. See &ldquo;Use of Proceeds.&rdquo;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt"><B>Dividend policy</B></FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">We have not historically declared or paid any cash dividends on our common stock. We currently intend to retain all of our future earnings, if any, for use in our business and do not anticipate paying any cash dividends on our common stock in the foreseeable future. Any future determination to pay cash dividends on our common stock will be made by our board of directors and will depend upon our results of operations, financial condition, capital requirements, regulatory and contractual restrictions, our business strategy and other factors that our board of directors deems relevant. See &ldquo;Dividend Policy.&rdquo;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt"><B>Listing and trading symbol</B></FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">We intend to apply to list our common stock on the NASDAQ Capital Market under the symbol &ldquo;ESQ.&rdquo;</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 49%"><FONT STYLE="font-size: 10pt"><B>Risk factors</B></FONT></TD>
    <TD STYLE="width: 3%">&nbsp;</TD>
    <TD STYLE="width: 48%"><FONT STYLE="font-size: 10pt">See &ldquo;Risk Factors&rdquo; for a discussion of factors you should carefully consider before deciding to invest in our common stock.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Unless otherwise indicated, all information
in this prospectus relating to the number of shares of common stock to be outstanding immediately after the completion of this
offering is based on 5,003,030 shares outstanding as of March 31, 2017 and:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>assumes no exercise of the underwriter&rsquo;s option to purchase up to [<FONT STYLE="font-family: Symbol">&middot;</FONT>]
additional shares of common stock from us;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>excludes 1,013,045 shares of common stock issuable upon the exercise of outstanding stock options at a weighted average exercise
price of $12.14 per share (333,315 shares of which are currently exercisable) as of March 31, 2017;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">excludes 11,562 shares of our common stock reserved for issuance in
connection with restricted stock awards, restricted stock unit awards, and stock options available for issuance under our 2007
Stock Option Plan and our 2011 Stock Compensation Plan as of March 31, 2017; and</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">excludes 66,985 shares of our Series B Preferred Stock that were issued
in December 2014 that are not convertible by the holder, but are convertible on a one for one basis into shares of our common stock
under certain circumstances. </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Summary Historical Consolidated Financial
Data</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following table sets forth
summary historical consolidated financial data as of the dates and for the periods shown. The summary balance sheet data as
of December 31, 2016 and 2015 and the summary income statement data for the years then ended have been derived from our
audited consolidated financial statements included elsewhere in this prospectus. The summary balance sheet data as of
December 31, 2014 and the summary income statement data for the year then ended have been derived from our audited
consolidated financial statements that are not included in this prospectus. The summary consolidated financial data as of
March 31, 2017 and for the three months ended March 31, 2017 and 2016 is derived from our unaudited interim condensed
consolidated financial statements included elsewhere in this prospectus and includes all normal and recurring adjustments
that we consider necessary for a fair presentation. The summary consolidated balance sheet data as of March 31, 2016 is
derived from our unaudited interim condensed consolidated financial statements that are not included in this prospectus and
have not been subject to review procedures from our independent accountants. Operating results for the three months ended
March 31, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. The
information should be read in conjunction with &ldquo;Selected Historical Consolidated Financial Data,&rdquo; &ldquo;Risk
Factors,&rdquo; &ldquo;Management Discussion and Analysis of Financial Condition and Results of Operations&rdquo; and our
consolidated financial statements and the related notes included elsewhere in this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 8pt">&nbsp;</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">At&nbsp;or&nbsp;For&nbsp;the&nbsp;Three&nbsp;Months<BR>
    Ended&nbsp;March&nbsp;31,</TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="10" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">At&nbsp;or&nbsp;For&nbsp;the&nbsp;Years&nbsp;Ended&nbsp;December&nbsp;31,</TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 8pt">&nbsp;</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2017</TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2016</TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2016</TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2015</TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2014</TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 8pt">&nbsp;</TD><TD STYLE="font-size: 8pt; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="18" STYLE="font-size: 8pt; font-weight: bold; text-align: center">(Dollars in thousands, except share and per share data)</TD><TD STYLE="font-size: 8pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Balance Sheet Data:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 35%; text-align: left">Total assets</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">438,059</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">351,500</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">424,833</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">352,650</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">330,690</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Cash and cash equivalents</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">32,586</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,069</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">42,993</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">33,154</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">71,891</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Securities available-for-sale</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">103,652</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">79,200</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">92,645</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">84,239</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">70,925</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Loans receivable, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">287,033</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">233,294</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">275,165</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">221,720</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">170,512</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Restricted stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,746</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,487</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,649</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,430</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">237</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">383,372</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">298,693</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">370,788</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">301,687</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">290,774</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Secured borrowings</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">284</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">378</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">371</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">381</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">391</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Total stockholders&rsquo; equity</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">53,244</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">51,170</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">52,186</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">49,425</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38,542</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Income Statement Data:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Interest income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">4,432</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">3,733</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">16,168</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">12,451</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">10,714</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Interest expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">137</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">101</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">511</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">457</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">466</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 9pt">Net interest income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,295</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,632</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,657</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,994</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,248</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Provision for loan losses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">150</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">145</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">595</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">930</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">300</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Net interest income after provision for loan losses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,145</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,487</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,062</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,064</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,948</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Noninterest income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,204</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">987</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,125</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,943</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,765</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Noninterest expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,024</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,420</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">14,599</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">12,171</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">11,262</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Income before income tax expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,325</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,054</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,588</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,836</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">451</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Income tax expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">510</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">411</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,766</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">664</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">410</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Net income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">815</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">643</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,822</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,172</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">41</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Less: Preferred stock dividends</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net income available to common stockholders</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">815</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">643</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,822</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,172</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">41</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold">Per Share Data:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>Earnings per common share:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 10pt">Basic</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.16</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.13</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.56</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.25</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.01</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 10pt">Diluted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.16</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.13</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.55</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.25</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.01</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Book value per common share(1)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">10.50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">10.07</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">10.29</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">9.72</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">8.98</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>Tangible book value per common share(2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">10.50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">10.07</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">10.29</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">9.72</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">8.98</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Selected Performance Ratios:</B></P></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Return on average assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.79</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.74</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.74</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.36</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.01</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Net interest margin</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.23</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.27</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.25</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.74</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.86</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Efficiency ratio, adjusted(3)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">73.18</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">74.14</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">73.82</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">81.48</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">94.94</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Allowance for loan losses to total loans</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.21</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.26</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.23</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.25</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.25</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Nonperforming loans to total loans(4)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.00</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.00</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.00</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.00</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.00</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(1)</TD><TD>For purposes of computing book value per common share, book value equals total common stockholders&rsquo; equity. Total common
stockholders&rsquo; equity equals total stockholders&rsquo; equity, less preferred equity. Preferred equity was $720 and $1,697
at March 31, 2017 and 2016, respectively, and $720, $1,697 and $1,842 at December 31, 2016, 2015 and 2014, respectively.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(2)</TD><TD>The Company had no intangible assets as of the dates indicated. Thus, tangible book value per common share is the same as book
value per common share for each of the periods indicated.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(3)</TD><TD>Efficiency ratio represents noninterest expenses, divided by the sum of net interest income plus noninterest income. With respect
to efficiency ratio, adjusted, noninterest income excludes gains or losses on sale of investment securities. This is a non-GAAP
financial measure. See &ldquo;Non-GAAP Financial Measure Reconciliation&rdquo; below for a reconciliation of this measure to its
most comparable GAAP measure.</TD></TR></TABLE>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(4)</TD><TD>Nonperforming loans include nonaccrual loans, loans past due 90 days and still accruing interest and loans modified under troubled
debt restructurings.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-indent: -0.25in"><B>Non-GAAP Financial Measure Reconciliation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-indent: -0.25in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">The efficiency ratio is a non-GAAP measure
of expense control relative to adjusted revenue. We calculate the efficiency ratio by dividing total noninterest expenses, as determined
under GAAP, by the sum of total net interest income and total noninterest income, each as determined under GAAP, but excluding
net gains on securities and other non-recurring income sources, if applicable, from this calculation, which we refer to below as
adjusted revenue. We believe that this provides one reasonable measure of core expenses relative to core revenue.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">We believe that this non-GAAP financial measure
provides information that is important to investors and that is useful in understanding our financial position, results and ratios.
However, this non-GAAP financial measure is supplemental and is not a substitute for an analysis based on GAAP measures. As other
companies may use different calculations for this measure, this presentation may not be comparable to other similarly titled measures
by other companies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 8pt">&nbsp;</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">At March 31,</TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="10" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">At December 31,</TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 8pt">&nbsp;</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2017</TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2016</TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2016</TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2015</TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2014</TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 8pt">&nbsp;</TD><TD STYLE="font-size: 8pt; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="18" STYLE="font-size: 8pt; font-weight: bold; text-align: center">(Dollars in thousands)</TD><TD STYLE="font-size: 8pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Efficiency Ratio:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 35%; text-align: left">Net interest income</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">4,295</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">3,632</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">15,657</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">11,994</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">10,247</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Noninterest income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,204</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">987</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,125</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,943</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,766</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Less: Net gains on sales of securities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">151</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Adjusted revenue</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">5,499</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">4,625</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">19,776</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">14,937</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">11,862</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Total noninterest expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,024</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,420</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14,599</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,171</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,262</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Efficiency ratio</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">73.18</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">74.14</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">73.82</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">81.48</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">94.94</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><A NAME="a_002"></A>RISK FACTORS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><I>Investing in our common stock involves a
high degree of risk. Before you decide to invest in our common stock, you should carefully consider the risks described below,
together with all other information included in this prospectus, including our consolidated financial statements and the related
notes included elsewhere in this prospectus. We believe the events described below are the risks that are material to us as of
the date of this prospectus. If any of the following risks actually occurs, our business, prospects, financial condition, results
of operations and cash flow could be materially and adversely affected. In such an event, the value of our common stock could decline
and you could lose all or part of your investment. This prospectus also contains&nbsp;forward-looking&nbsp;statements, estimates
and projections that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the
forward-looking statements, estimates and projections as a result of specific factors, including the risk factors described below.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Risks Related to Our Business</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; background-color: white"><B>We have a limited operating history
and have recently experienced significant growth, which makes it difficult to forecast our revenue and evaluate our business and
future prospects. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; background-color: white">We have only been in
existence since 2006, and in 2015, 2016 and during the three months ended March 31, 2017, we experienced significant growth following
a capital raise and the conversion from a savings and loan holding company with a savings bank subsidiary to a bank holding company
with a national bank subsidiary. As a result of our limited operating history and recent accelerated growth, in particular in our
merchant services business, our ability to forecast our future results of operations and plan for and model future growth is limited
and subject to a number of uncertainties. We have encountered and will continue to encounter risks and uncertainties frequently
experienced by growing companies in the financial services industry, such as the risks and uncertainties described herein. Accordingly,
we may be unable to prepare accurate internal financial forecasts and our results of operations in future reporting periods may
be below the expectations of investors. If we do not address these risks successfully, our results of operations could differ materially
from our estimates and forecasts or the expectations of our stockholders, causing our business to suffer and our stock price to
decline.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; background-color: white"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; background-color: white"><B>Because we intend to continue to increase
our commercial loans, our credit risk may increase.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; background-color: white">At March 31, 2017,
our commercial loans totaled $112.8 million, or 39.0% of our total loans, including $101.2 million of Commercial Attorney-Related
Loans, which represented 89.7% of our commercial loans. We intend to increase our originations of commercial loans, including our
Commercial Attorney-Related Loans, which consist of working capital lines of credit, case cost lines of credit, term loans to law
firms, and post-settlement commercial and other commercial attorney-related loans. These loans generally have more risk than 1-4
family residential mortgage loans and commercial loans secured by real estate. Since repayment of commercial loans, including our
Commercial Attorney-Related Loans, depends on the successful receipt of settlement proceeds or the successful management and operation
of the borrower&rsquo;s businesses, repayment of such loans can be affected by adverse court decisions and adverse conditions in
the local and national economy. Commercial Attorney-Related Loans present unique credit risks in that attorney or law firm revenues
can be volatile depending on the number of cases, the timing of court decisions and the timing of the overall judicial process.
In our experience, an average case can take two to four years to litigate. Determining the value of an attorney&rsquo;s or law
firm&rsquo;s case inventory (borrowing base) is also inherently an imprecise exercise. Though repayment of case lines is not dependent
on a favorable case settlement, unfavorable outcomes can ultimately impact the cash flows of the borrower. An adverse development
with respect to one loan or one credit relationship can expose us to significantly greater risk of loss compared to an adverse
development with respect to a 1-4 family residential mortgage loan or a commercial real estate loan.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; background-color: white">Because we plan to
continue to increase our originations of these loans, commercial loans generally have a larger average size as compared with other
loans such as residential loans, and the collateral for commercial loans is generally less readily-marketable, losses incurred
on a small number of commercial loans could have a disproportionate and material adverse impact on our financial condition and
results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>A substantial portion of our business is dependent on the prospects
of the legal industry and changes in the legal industry may adversely affect our growth and profitability.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We depend on our relationships within the legal
community and our products and services tailored to the legal industry account for a significant source of our revenue. As we intend
to focus our growth on our Attorney-Related Loan products, changes in the legal industry, including a significant decrease in the
number of litigation cases in the United States, reform of the tort industry that reduces the ability of plaintiffs to bring cases
or reduces the damages plaintiffs can receive, or a significant increase in the unemployment rate for attorneys, could, individually
or in the aggregate, have a material adverse effect on our profitability, financial condition and growth of our business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>A substantial portion of our loan portfolio consists of multifamily
real estate loans and commercial real estate loans, which have a higher degree of risk than other types of loans.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">At March 31, 2017, we had $92.8 million of multifamily
loans and $21.3 million of commercial real estate loans. Multifamily and commercial real estate loans represented 39.4% of our
total loan portfolio at March 31, 2017. Multifamily and commercial real estate loans are often larger and involve greater risks
than other types of lending. Because payments on such loans are often dependent on the successful operation or development of the
property or business involved, repayment of such loans is often more sensitive than other types of loans to adverse conditions
in the real estate market or the general business climate and economy. Accordingly, a downturn in the real estate market and a
challenging business and economic environment may increase our risk related to multifamily and commercial real estate loans. Unlike
residential mortgage loans, which generally are made on the basis of the borrower&rsquo;s ability to make repayment from their
employment and other income and which are secured by real property whose value tends to be more easily ascertainable, multifamily
and commercial real estate loans typically are made on the basis of the borrower&rsquo;s ability to make repayment from the cash
flow of the commercial venture. If the cash flow from business operations is reduced, the borrower's ability to repay the loan
may be impaired. Due to the larger average size of each multifamily and commercial real estate loan as compared with other loans
such as residential loans, as well as collateral that is generally less readily-marketable, losses incurred on a small number of
multifamily and commercial real estate loans could have a material adverse impact on our financial condition and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>We expect to increase our originations of
consumer loans, including post-settlement consumer and structured settlement loans, and such loans generally carry greater risk
than loans secured by owner-occupied, 1-4 family real estate, and these risks will increase as we continue to increase originations
of these types of loans.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">At March 31, 2017, our consumer loans totaled
$11.0 million, or 3.8% of our total loan portfolio, of which $3.7 million, or 33.6%, were post-settlement consumer loans and $1.6
million, or 14.1%, were structured settlement loans. Consumer loans typically have shorter terms, lower balances, higher yields
and higher risks of default than 1-4 family residential loans. Consumer loan collections are dependent on the borrower&rsquo;s
continuing financial stability and are therefore more likely to be affected by adverse personal circumstances, such as a loss
of employment or unexpected medical costs. While our consumer Attorney-Related Loans, which consist of post-settlement consumer
and structured settlement loans (&ldquo;Consumer Attorney-Related Loans&rdquo;), are typically well secured by the settlement
amount, we can still be exposed to the financial stability of the borrower as a result of unforeseen rulings or administrative
legal anomalies with a particular borrower&rsquo;s settlement that eliminate or greatly reduce their settlement amount. Furthermore,
the application of various federal and state laws, including bankruptcy and insolvency laws, may limit our ability to recover
on such loans. As we increase our originations of consumer loans, it may become necessary to increase our provision for loan losses
in the event our losses on these loans increase, which would reduce our profits.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>As a business operating in the financial services industry, our
business and operations may be adversely affected in numerous and complex ways by weak economic conditions.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our business and operations, which primarily
consist of lending money to customers in the form of loans, borrowing money from customers in the form of deposits and investing
in securities, are sensitive to general business and economic conditions in the United States. If the U.S. economy weakens, our
growth and profitability from our lending, deposit and investment operations could be constrained. Uncertainty about the federal
fiscal policymaking process, the medium and long-term fiscal outlook of the federal government, and future tax rates is a concern
for</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">businesses, consumers and investors in the United States. In addition,
economic conditions in foreign countries, including uncertainty over the stability of the euro currency, could affect the stability
of global financial markets, which could hinder U.S. economic growth. Weak economic conditions are characterized by deflation,
fluctuations in debt and equity capital markets, a lack of liquidity and/or depressed prices in the secondary market for mortgage
loans, increased delinquencies on mortgage, consumer and commercial loans, residential and commercial real estate price declines
and lower home sales and commercial activity. The current economic environment is also characterized by interest rates at historically
low levels, which impacts our ability to attract deposits and to generate attractive earnings through our investment portfolio.
All of these factors are detrimental to our business, and the interplay between these factors can be complex and unpredictable.
Our business is also significantly affected by monetary and related policies of the U.S. federal government and its agencies. Changes
in any of these policies are influenced by macroeconomic conditions and other factors that are beyond our control. Adverse economic
conditions and government policy responses to such conditions could have a material adverse effect on our business, financial condition,
results of operations and prospects.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>A substantial majority of our loans and operations are in New
York, and therefore our business is particularly vulnerable to a downturn in the New York City economy.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Unlike larger financial institutions that are
more geographically diversified, a large portion of our business is concentrated primarily in the state of New York, and in New
York City in particular. As of December 31, 2016, 80.9% of our loan portfolio was in New York and our loan portfolio had concentrations
of 64.0% in New York City. If the local economy, and particularly the real estate market, declines, the rates of delinquencies,
defaults, foreclosures, bankruptcies and losses in our loan portfolio would likely increase. As a result of this lack of diversification
in our loan portfolio, a downturn in the local economy generally and real estate market specifically could significantly reduce
our profitability and growth and adversely affect our financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Interest rate shifts may reduce net interest income and otherwise
negatively impact our financial condition and results of operations.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The majority of our banking assets are monetary
in nature and subject to risk from changes in interest rates. Like most financial institutions, our earnings and cash flows depend
to a great extent upon the level of our net interest income, or the difference between the interest income we earn on loans, investments
and other interest earning assets, and the interest we pay on interest bearing liabilities, such as deposits and borrowings. Changes
in interest rates can increase or decrease our net interest income, because different types of assets and liabilities may react
differently, and at different times, to market interest rate changes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">When interest bearing liabilities mature or
reprice more quickly, or to a greater degree than interest earning assets in a period, an increase in interest rates could reduce
net interest income. Similarly, when interest earning assets mature or reprice more quickly, or to a greater degree than interest
bearing liabilities, falling interest rates could reduce net interest income. Additionally, an increase in interest rates may,
among other things, reduce the demand for loans and our ability to originate loans and decrease loan repayment rates. A decrease
in the general level of interest rates may affect us through, among other things, increased prepayments on our loan portfolio and
increased competition for deposits. Accordingly, changes in the level of market interest rates affect our net yield on interest
earning assets, loan origination volume and our overall results. Although our asset-liability management strategy is designed to
control and mitigate exposure to the risks related to changes in market interest rates, those rates are affected by many factors
outside of our control, including governmental monetary policies, inflation, deflation, recession, changes in unemployment, the
money supply, international disorder and instability in domestic and foreign financial markets.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Our small size makes it more difficult for
us to compete.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our small size makes it more difficult to compete
with other financial institutions which are generally larger and can more easily afford to invest in the marketing and technologies
needed to attract and retain customers. Because our principal source of income is the net interest income we earn on our loans
and investments after deducting interest paid on deposits and other sources of funds, our ability to generate the revenues needed
to cover our expenses and finance such investments is limited by the size of our loan and investment portfolios. In addition, we
compete with many larger financial institutions and other financial companies who operate in the merchant services business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Accordingly, we are not always able to offer new products and services
as quickly as our competitors. Our lower earnings also make it more difficult to offer competitive salaries and benefits. As a
smaller institution, we are also disproportionately affected by the continually increasing costs of compliance with new banking
and other regulations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>We may not be able to grow, and if we do
we may have difficulty managing that growth.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our business strategy is to continue to grow
our assets and expand our operations, including through potential strategic acquisitions. Our ability to grow depends, in part,
upon our ability to expand our market share, successfully attract core deposits, and to identify loan and investment opportunities
as well as opportunities to generate fee-based income. We can provide no assurance that we will be successful in increasing the
volume of our loans and deposits at acceptable levels and upon terms acceptable to us. We also can provide no assurance that we
will be successful in expanding our operations organically or through strategic acquisition while managing the costs and implementation
risks associated with this growth strategy.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We expect to continue to experience growth in
the number of our employees and customers and the scope of our operations. Our success will depend upon the ability of our officers
and key employees to continue to implement and improve our operational and other systems, to manage multiple, concurrent customer
relationships, and to hire, train and manage our employees. In the event that we are unable to perform all these tasks and meet
these challenges effectively, including continuing to attract core deposits, our operations, and consequently our earnings, could
be adversely impacted.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>We rely heavily on our management team, our board of directors
and our advisory board members and our business could be adversely affected by the unexpected loss of one or more of our officers
or directors.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We are led by a management team with substantial
experience in the markets that we serve and the financial products that we offer. Our operating strategy focuses on providing products
and services through long-term relationship managers. Additionally, we rely heavily on our directors&rsquo; and our advisory board
members&rsquo; extensive business and personal contacts and relationships to help establish and maintain our customer base. Accordingly,
our success depends in large part on the performance of our key officers and directors, as well as on our ability to attract, motivate
and retain highly qualified senior and middle management. Competition for employees is intense, and the process of identifying
key personnel with the combination of skills and attributes required to execute our business plan may be lengthy. We may not be
successful in retaining our key employees or directors and the unexpected loss of services of one or more of our officers or directors
could have a material adverse effect on our business because of their skills, knowledge of our market and financial products, years
of industry experience, long-term business and customer relationships and the difficulty of finding qualified replacement personnel.
If the services of any of our key personnel should become unavailable for any reason, we may not be able to identify and hire qualified
persons on terms acceptable to us, which could have an adverse effect on our business, financial condition and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Our merchants or ISOs may be unable to satisfy obligations for
which we may ultimately be liable.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We are subject to the risk of our merchants
or ISOs being unable to satisfy obligations for which we may ultimately be liable. If we are unable to collect amounts due from
a merchant or ISO because of insolvency or other reasons, we may bear the loss for those full amounts. We manage our credit risk
and attempt to mitigate our risk by obtaining reserves, both from merchants and ISOs, and through other contractual remedies. It
is possible, however, that a default on such obligations by one or more of our ISOs or merchants, could, individually or in the
aggregate, have a material adverse effect on our business, financial condition and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Fraud by merchants or others could have a material adverse effect
on our business and financial condition.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We may be subject to liability for fraudulent
transactions initiated by merchants or others. Examples of such fraud include when a merchant or other party knowingly uses a stolen
or counterfeit card to make a transaction, or if a merchant intentionally fails to deliver the merchandise or services sold in
an otherwise valid transaction. Criminals are using increasingly sophisticated methods to engage in illegal activities such as
counterfeiting and fraud. It is possible that incidents of fraud could increase in the future. Failure to effectively manage risk
and prevent fraud would increase</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">our chargeback liability or other liability. Increases in chargebacks
or other liability could have a material adverse effect on our business, financial condition, and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Changes in card network rules or standards could adversely affect
our business.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In order to provide our merchant services, we
are members of the Visa and MasterCard networks. As such, we are subject to card network rules that could subject us or our ISOs
and merchants to a variety of fines or penalties that may be assessed on us, our ISOs, and our merchants. The termination of our
membership, or the revocation of registration of any of our ISOs, or any changes in card network rules or standards could increase
the cost of operating our merchant servicer business or limit our ability to provide merchant services to or through our customers,
and could have a material adverse effect on our business, financial condition and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Changes in card network fees could impact our operations.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">From time to time, the card networks increase
the fees (known as interchange fees) that they charge to acquirers and we charge to our merchants. It is possible that competitive
pressures will result in us absorbing a portion of such increases in the future, which would increase our costs, reduce our profit
margin and adversely affect our business and financial condition. In addition, the card networks require certain capital requirements.
An increase in the required capital level would further limit our use of capital for other purposes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>We are subject to certain operational risks, including, but not
limited to, customer or employee fraud and data processing system failures and errors.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Employee errors and employee and customer misconduct
could subject us to financial losses or regulatory sanctions and seriously harm our reputation. Misconduct by our employees could
include hiding unauthorized activities from us, improper or unauthorized activities on behalf of our customers or improper use
of confidential information. It is not always possible to prevent employee errors and misconduct, and the precautions we take to
prevent and detect this activity may not be effective in all cases. Employee errors could also subject us to financial claims for
negligence.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We maintain a system of internal controls and
insurance coverage to mitigate against operational risks, including data processing system failures and errors and customer or
employee fraud. If our internal controls fail to prevent or detect an occurrence, or if any resulting loss is not insured or exceeds
applicable insurance limits, it could have a material adverse effect on our business, financial condition and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>If the allowance for loan losses is not sufficient to cover actual
loan losses, earnings could decrease.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Loan customers may not repay their loans according
to the terms of their loans, and the collateral securing the payment of their loans may be insufficient to assure repayment. We
may experience significant credit losses, which could have a material adverse effect on our operating results. Various assumptions
and judgments about the collectability of the loan portfolio are made, including the creditworthiness of borrowers and the value
of the real estate and other assets serving as collateral for the repayment of many loans. In determining the amount of the allowance
for loan losses, management reviews the loans and the loss and delinquency experience and evaluates economic conditions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">At March 31, 2017, our allowance for loan losses
as a percentage of total loans, net of unearned income, was 1.21%. The determination of the appropriate level of allowance is subject
to judgment and requires us to make significant estimates of current credit risks and future trends, all of which are subject to
material changes. If assumptions prove to be incorrect, the allowance for loan losses may not cover probable incurred losses in
the loan portfolio at the date of the financial statements. Significant additions to the allowance would materially decrease net
income. Non-performing loans may increase and non-performing or delinquent loans may adversely affect future performance. We had
no non-performing loans at March 31, 2017. In addition, federal and state regulators periodically review the allowance for loan
losses and may require an increase in the allowance for loan losses or recognize further loan charge-offs. Any significant increase
in our allowance for loan losses or loan charge-offs as</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">required by these regulatory agencies could have a material adverse
effect on our results of operations and financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Our loan portfolio is unseasoned.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">With a growing and generally
unseasoned loan portfolio, our credit risk may continue to increase and our future performance could be adversely affected. While
we believe we have underwriting standards designed to manage normal lending risks, it is difficult to assess the future performance
of our loan portfolio due to the recent origination of many of these loans. As a result, it is difficult to predict whether any
of our loans will become non-performing or delinquent loans, or whether we will have any non-performing or delinquent loans that
will adversely affect our future performance. At March 31, 2017, the average age of our loans was 4.26 years, 2.76 years, 2.98
years, 0.41 years, 3.07 years and 0.93 years for our 1-4 family residential loans, multifamily loans, commercial real estate loans,
construction loans, commercial loans and consumer loans, respectively. At March 31, 2017, the average age of our loan portfolio
was 2.10 years.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Changes in the valuation of our securities
portfolio could hurt our profits and reduce our stockholders&rsquo; equity. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our securities portfolio may be impacted by
fluctuations in market value, potentially reducing accumulated other comprehensive income and/or earnings. Fluctuations in market
value may be caused by changes in market interest rates, lower market prices for securities and limited investor demand. Management
evaluates securities for other-than-temporary impairment on a quarterly basis, with more frequent evaluation for selected issues.
In analyzing a debt issuer&rsquo;s financial condition, management considers whether the securities are issued by the federal government
or its agencies, whether downgrades by bond rating agencies have occurred, industry analysts&rsquo; reports and, to a lesser extent
given the relatively insignificant levels of depreciation in our debt portfolio, spread differentials between the effective rates
on instruments in the portfolio compared to risk-free rates. In analyzing an equity issuer&rsquo;s financial condition, management
considers industry analysts&rsquo; reports, financial performance and projected target prices of investment analysts within a one-year
time frame. If this evaluation shows impairment to the actual or projected cash flows associated with one or more securities, a
potential loss to earnings may occur. Changes in interest rates can also have an adverse effect on our financial condition, as
our available-for-sale securities are reported at their estimated fair value, and therefore are impacted by fluctuations in interest
rates. We increase or decrease our stockholders&rsquo; equity by the amount of change in the estimated fair value of the available-for-sale
securities, net of taxes. Declines in market value could result in other-than-temporary impairments of these assets, which would
lead to accounting charges that could have a material adverse effect on our net income and capital levels. Refer to &ldquo;Management&rsquo;s
Discussion and Analysis of Financial Condition and Results of Operations&mdash;Securities Portfolio.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>We may not be able to adequately measure and limit the credit
risk associated with our loan portfolio, which could adversely affect our profitability.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">As a part of the products and services that
we offer, we make commercial and commercial real estate loans. The principal economic risk associated with each class of loans
is the creditworthiness of the borrower, which is affected by the strength of the relevant business market segment, local market
conditions, and general economic conditions. Additional factors related to the credit quality of commercial loans include the quality
of the management of the business and the borrower&rsquo;s ability both to properly evaluate changes in the supply and demand characteristics
affecting our market for products and services, and to effectively respond to those changes. Additional factors related to the
credit quality of commercial real estate loans include tenant vacancy rates and the quality of management of the property. A failure
to effectively measure and limit the credit risk associated with our loan portfolio could have an adverse effect on our business,
financial condition, and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Changes in economic conditions could cause an increase in delinquencies
and nonperforming assets, including loan charge-offs, which could depress our net income and growth.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our loan portfolio includes many real estate
secured loans, demand for which may decrease during economic downturns as a result of, among other things, an increase in unemployment,
a decrease in real estate values and, a slowdown in housing. If we see negative economic conditions develop in the United States
as a whole or our New York market, we could experience higher delinquencies and loan charge-offs, which would reduce our net income
and adversely affect our financial condition. Furthermore, to the extent that real estate collateral is obtained through</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">foreclosure, the costs of holding and marketing the real estate
collateral, as well as the ultimate values obtained from disposition, could reduce our earnings and adversely affect our financial
condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>We operate in a highly competitive industry and face significant
competition from other financial institutions and financial services providers, which may decrease our growth or profits.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Consumer and commercial banking as well as merchant
services are highly competitive industries. Our market area contains not only a large number of community and regional banks, but
also a significant presence of the country&rsquo;s largest commercial banks. We compete with other state and national financial
institutions, as well as savings and loan associations, savings banks, and credit unions, for deposits and loans. In addition,
we compete with financial intermediaries, such as consumer finance companies, specialty finance companies, commercial finance companies,
mortgage banking companies, insurance companies, securities firms, mutual funds, and several government agencies, as well as major
retailers, all actively engaged in providing various types of loans and other financial services, including merchant services.
Competition for Attorney-Related Loans is derived primarily from eight to ten nationally-oriented financial companies that specialize
in this market. Some of these companies are focused exclusively on loans to law firms, while others offer loans to plaintiffs as
well. We also face significant competition from many larger institutions, including large commercial banks and third party processors
that operate in the merchant services business, and our ability to grow that portion of our business depends on us being able to
continue to attract and retain ISOs and merchants. Some of these competitors may have a long history of successful operations nationally
as well as in our market area and greater ties to businesses or the legal community and more expansive banking relationships, as
well as more established depositor bases, fewer regulatory constraints, and lower cost structures than we do. Competitors with
greater resources may possess an advantage through their ability to maintain numerous banking locations in more convenient sites,
to conduct more extensive promotional and advertising campaigns, or to operate a more developed technology platform. Due to their
size, many competitors may offer a broader range of products and services, as well as better pricing for certain products and services
than we can offer. For example, in the current low interest rate environment, competitors with lower costs of capital may solicit
our customers to refinance their loans with a lower interest rate. Further, increased competition among financial services companies
due to the recent consolidation of certain competing financial institutions may adversely affect our ability to market our products
and services. Technology has lowered barriers to entry and made it possible for banks and specifically finance companies to compete
in our market area and for non-banks to offer products and services traditionally provided by banks.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The financial services industry could become
even more competitive as a result of legislative, regulatory, and technological changes and continued consolidation. Banks, securities
firms, and insurance companies can merge under the umbrella of a financial holding company, which can offer virtually any type
of financial service, including banking, securities underwriting, insurance (both agency and underwriting), and merchant banking.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our ability to compete successfully depends
on a number of factors, including:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>our ability to develop, maintain, and build upon long-term customer relationships based on quality service and high ethical
standards;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>our ability to attract and retain qualified employees to operate our business effectively;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>our ability to expand our market position;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the scope, relevance, and pricing of products and services that we offer to meet customer needs and demands;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the rate at which we introduce new products and services relative to our competitors;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>customer satisfaction with our level of service; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>industry and general economic trends.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Failure to perform in any of these areas could
significantly weaken our competitive position, which could adversely affect our growth and profitability, which, in turn, could
harm our business, financial condition, and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>A lack of liquidity could adversely affect our financial condition
and results of operations.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Liquidity is essential to our business. We rely
on our ability to generate deposits and effectively manage the repayment and maturity schedules of our loans to ensure that we
have adequate liquidity to fund our operations. An inability to raise funds through deposits, borrowings, the sale of loans and
other sources could have a substantial negative effect on our liquidity. Our most important source of funds is deposits. Deposit
balances can decrease when customers perceive alternative investments as providing a better risk/return tradeoff. If customers
move money out of bank deposits and into other investments such as money market funds, we would lose a relatively low-cost source
of funds, increasing our funding costs and reducing our net interest income and net income.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Other primary sources of funds consist of cash
flows from operations, maturities and sales of investment securities, and proceeds from the issuance and sale of our equity securities
to investors. Additional liquidity is provided by the ability to borrow from the Federal Home Loan Bank of New York. We also may
borrow funds from third-party lenders, such as other financial institutions. Our access to funding sources in amounts adequate
to finance or capitalize our activities, or on terms that are acceptable to us, could be impaired by factors that affect us directly
or the financial services industry or economy in general, such as disruptions in the financial markets or negative views and expectations
about the prospects for the financial services industry. Our access to funding sources could also be affected by a decrease in
the level of our business activity as a result of a downturn in our markets or by one or more adverse regulatory actions against
us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Any decline in available funding could adversely
impact our ability to originate loans, invest in securities, meet our expenses, or to fulfill obligations such as repaying our
borrowings or meeting deposit withdrawal demands, any of which could have a material adverse impact on our liquidity, business,
financial condition and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Our ten largest deposit clients account for 34.0% of our total
deposits.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">As of March 31, 2017, our ten largest bank depositors
accounted for, in the aggregate, 34.0% of our total deposits. As a result, a material decrease in the volume of those deposits
by a relatively small number of our depositors could reduce our liquidity, in which event it could became necessary for us to replace
those deposits with higher-cost deposits or FHLB borrowings, which would adversely affect our net interest income and, therefore,
our results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>As a bank holding company, the sources of funds available to
us are limited.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Any future constraints on liquidity at the holding
company level could impair our ability to declare and pay dividends on our common stock. In some instances, notice to, or approval
from, the FRB may be required prior to our declaration or payment of dividends. Further, our operations are primarily conducted
by our subsidiary, Esquire Bank, which is subject to significant regulation. Federal banking laws restrict the payment of dividends
by banks to their holding companies, and Esquire Bank will be subject to these restrictions in paying dividends to us. Because
our ability to receive dividends or loans from Esquire Bank is restricted, our ability to pay dividends to our stockholders is
also restricted.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Additionally, the right of a bank holding company
to participate in the assets of its subsidiary bank in the event of a bank-level liquidation or reorganization is subject to the
claims of the bank&rsquo;s creditors, including depositors, which take priority, except to the extent that the holding company
may be a creditor with a recognized claim.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Our ability to maintain our reputation is critical to the success
of our business, and the failure to do so may materially adversely affect our performance.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We are a community bank, and our reputation
is one of the most valuable components of our business. As such, we strive to conduct our business in a manner that enhances our
reputation. This is done, in part, by recruiting, hiring, and retaining employees who share our core values of being an integral
part of the communities we serve, delivering superior service to our customers, and caring about our customers and associates.
If our reputation is negatively affected, by the actions of our employees or otherwise, our business and, therefore, our operating
results may be materially adversely affected. Further, negative public opinion can expose us to litigation and regulatory action
as we seek to implement our growth strategy, which would adversely affect our business, financial condition and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>We have lower lending limits and different lending risks than
certain of our larger, more diversified competitors.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We are a community banking institution that
provides banking services to the local communities in the market areas in which we operate. Our ability to diversify our economic
risks is limited by our own local markets and economies. We lend primarily to individuals and to small to medium-sized businesses,
which may expose us to greater lending risks than those of banks that lend to larger, better-capitalized businesses with longer
operating histories. In addition, our legally mandated lending limits are lower than those of certain of our competitors that have
more capital than we do. As a result of our size, at March 31, 2017, our legal lending limit was $7.8 million, and there was one
loan within 10% of this limit. Our lower lending limits may discourage borrowers with lending needs that exceed our limits from
doing business with us. We may try to serve such borrowers by selling loan participations to other financial institutions; however,
this strategy may not succeed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>We face risks related to our operational, technological and organizational
infrastructure.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our ability to grow and compete is dependent
on our ability to build or acquire the necessary operational and technological infrastructure and to manage the cost of that infrastructure
as we expand. Similar to other large corporations, operational risk can manifest itself in many ways, such as errors related to
failed or inadequate processes, faulty or disabled computer systems, fraud by employees or outside persons and exposure to external
events. As discussed below, we are dependent on our operational infrastructure to help manage these risks. In addition, we are
heavily dependent on the strength and capability of our technology systems which we use both to interface with our customers and
to manage our internal financial and other systems. Our ability to develop and deliver new products that meet the needs of our
existing customers and attract new ones depends on the functionality of our technology systems. Additionally, our ability to run
our business in compliance with applicable laws and regulations is dependent on these infrastructures.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We continuously monitor our operational and
technological capabilities and make modifications and improvements when we believe it will be cost effective to do so. In some
instances, we may build and maintain these capabilities ourselves. We also outsource some of these functions to third parties.
Specifically, we depend on third parties to provide our core systems processing, essential web hosting and other internet systems,
deposit processing and other processing services. In connection with our merchant services business, we (and our ISOs) rely on
various third parties to provide processing and clearing and settlement services to us in connection with card transactions. If
these third-party service providers experience difficulties, fail to comply with banking regulations or terminate their services
and we are unable to replace them with other service providers, our operations could be interrupted. If an interruption were to
continue for a significant period of time, our business, financial condition and results of operations could be adversely affected,
perhaps materially. Even if we are able to replace them, it may be at a higher cost to us, which could adversely affect our business,
financial condition and results of operations. We also face risk from the integration of new infrastructure platforms and/or new
third party providers of such platforms into its existing businesses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>A failure in our operational systems or infrastructure, or those
of third parties, could impair our liquidity, disrupt our businesses, result in the unauthorized disclosure of confidential information,
damage our reputation and cause financial losses.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our business, and in particular, our merchant
services business, is partially dependent on our ability to process and monitor, on a daily basis, a large number of transactions,
many of which are highly complex, across numerous and diverse markets. These transactions, as well as the information technology
services we provide to</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">clients, often must adhere to client-specific guidelines, as well
as legal and regulatory standards. Due to the breadth of our client base and our geographical reach, developing and maintaining
our operational systems and infrastructure is challenging, particularly as a result of rapidly evolving legal and regulatory requirements
and technological shifts. Our financial, accounting, data processing or other operating systems and facilities, and, as discussed
above, those the third-party service providers upon which we depend, may fail to operate properly or become disabled as a result
of events that are wholly or partially beyond our control, such as a spike in transaction volume, cyber-attack or other unforeseen
catastrophic events, which may adversely affect our ability to process these transactions or provide services.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>The occurrence of fraudulent activity, breaches or failures of
our information security controls or cybersecurity-related incidents could have a material adverse effect on our business, financial
condition and results of operations.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our operations rely on the secure processing,
storage and transmission of confidential and other sensitive business and consumer information on our computer systems and networks,
as well as those of our ISOs and processors. Under the card network rules and various federal and state laws, we are responsible
for safeguarding such information. Although we take protective measures to maintain the confidentiality, integrity and availability
of information across all geographic and product lines, and endeavor to modify these protective measures as circumstances warrant,
the nature of the threats continues to evolve. As a result, our computer systems, software and networks are vulnerable to unauthorized
access, loss or destruction of data (including confidential client information), account takeovers, unavailability of service,
computer viruses or other malicious code, cyber-attacks and other events that could have an adverse security impact. Despite the
defensive measures we take to manage our internal technological and operational infrastructure, these threats have in the past
and may in the future originate externally from third parties such as foreign governments, organized crime and other hackers, and
outsource or infrastructure-support providers and application developers, or may originate internally from within our organization.
Given the increasingly high volume of our transactions, certain errors may be repeated or compounded before they can be discovered
and rectified. In addition, security breaches or failures could result in the bank incurring liability to ISOs, members of the
card network and card issuers in relation to our merchant banking business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In particular, information pertaining to us
and our customers is maintained, and transactions are executed, on the networks and systems of us, our customers and certain of
our third-party partners, such as our online banking or reporting systems, ISO&rsquo;s customers and merchants who are part of
our merchant banking business. The secure maintenance and transmission of confidential information, as well as execution of transactions
over these systems, are essential to protect us and our customers against fraud and security breaches and to maintain our clients'
confidence. Breaches of information security also may occur, and in infrequent cases have occurred, through intentional or unintentional
acts by those having access or gaining access to our systems or our customers' or counterparties' confidential information, including
employees. In addition, increases in criminal activity levels and sophistication, advances in computer capabilities, new discoveries,
vulnerabilities in third-party technologies (including browsers and operating systems) or other developments could result in a
compromise or breach of the technology, processes and controls that we use to prevent fraudulent transactions and to protect data
about us, our customers and underlying transactions, as well as the technology used by our customers to access our systems. We
cannot be certain that the security measures we or our ISOs or processors have in place to protect this sensitive data will be
successful or sufficient to protect against all current and emerging threats designed to breach our systems or those of our ISOs
or processors. Although we have developed, and continue to invest in, systems and processes that are designed to detect and prevent
security breaches and cyber-attacks and periodically test our security, a breach of our systems, or those of our ISOs or processors,
could result in losses to us or our customers; loss of business and/or customers; damage to our reputation; the incurrence of additional
expenses (including the cost of notification to consumers, credit monitoring and forensics, and fees and fines imposed by the card
networks); disruption to our business; our inability to grow our online services or other businesses; additional regulatory scrutiny
or penalties; or our exposure to civil litigation and possible financial liability &mdash; any of which could have a material adverse
effect on our business, financial condition and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>If our enterprise risk management framework is not effective
at mitigating risk and loss to us, we could suffer unexpected losses and our results of operations could be materially adversely
affected.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our enterprise risk management framework seeks
to achieve an appropriate balance between risk and return, which is critical to optimizing stockholder value. We have established
processes and procedures intended to identify, measure, monitor, report and analyze the types of risk to which we are subject,
including credit, liquidity, operational, regulatory compliance and reputational. However, as with any risk management framework,
there are inherent limitations to our risk management strategies as there may exist, or develop in the future, risks that we have
not appropriately anticipated or identified. If our risk management framework proves ineffective, we could suffer unexpected losses
and our business and results of operations could be materially adversely affected.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Changes in accounting standards could materially impact our financial
statements.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">From time to time, the Financial Accounting
Standards Board or the SEC may change the financial accounting and reporting standards that govern the preparation of our financial
statements. Such changes may result in us being subject to new or changing accounting and reporting standards. In addition, the
bodies that interpret the accounting standards (such as banking regulators, outside auditors or management) may change their interpretations
or positions on how these standards should be applied. These changes may be beyond our control, can be hard to predict, and can
materially impact how we record and report our financial condition and results of operations. In some cases, we could be required
to apply a new or revised standard retrospectively, or apply an existing standard differently, also retrospectively, in each case
resulting in our needing to revise or restate prior period financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Risks Related to Our Industry and Regulation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Our business, financial condition, results of operations and
future prospects could be adversely affected by the highly regulated environment and the laws and regulations that govern our operations,
corporate governance, executive compensation and accounting principles, or changes in any of them.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">As a bank holding company, we are subject to
extensive examination, supervision and comprehensive regulation by various federal and state agencies that govern almost all aspects
of our operations. These laws and regulations are not intended to protect our stockholders. Rather, these laws and regulations
are intended to protect customers, depositors, the Deposit Insurance Fund (the &ldquo;DIF&rdquo;) and the overall financial stability
of the U.S. These laws and regulations, among other matters, prescribe minimum capital requirements, impose limitations on the
business activities in which we can engage, limit the dividend or distributions that Esquire Bank can pay to us, restrict the ability
of institutions to guarantee our debt, and impose certain specific accounting requirements on us that may be more restrictive and
may result in greater or earlier charges to earnings or reductions in our capital than generally accepted accounting principles
would require. Compliance with these laws and regulations is difficult and costly, and changes to these laws and regulations often
impose additional compliance costs. Our failure to comply with these laws and regulations, even if the failure follows good faith
effort or reflects a difference in interpretation, could subject us to restrictions on our business activities, fines and other
penalties, any of which could adversely affect our results of operations, capital base and the price of our securities. Further,
any new laws, rules and regulations could make compliance more difficult or expensive.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Likewise, the Company operates in an environment
that imposes income taxes on its operations at both the federal and state levels to varying degrees. Strategies and operating routines
have been implemented to minimize the impact of these taxes. Consequently, any change in tax legislation could significantly alter
the effectiveness of these strategies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The net deferred tax asset reported on the Company&rsquo;s
balance sheet generally represents the tax benefit of future deductions from taxable income for items that have already been recognized
for financial reporting purposes. The bulk of these deferred tax assets consists of deferred loan loss deductions, deferred compensation
deductions and unrealized losses on available-for-sale securities. The net deferred tax asset is measured by applying currently-enacted
income tax rates to the accounting period during which the tax benefit is expected to be realized. As of March 31, 2017, the Company&rsquo;s
net deferred tax asset was $2.6 million.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The President of the United States and some
members of Congress have announced plans to introduce legislation that would lower the federal corporate income tax rate from its
current level of 35%. If this tax rate reduction is enacted, it will result in an immediate impairment of the recorded net deferred
tax asset because the future</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">tax benefit of these deferrals would need to be re-measured for
the impact of the lower tax rate. Any such impairment would be recorded as a charge to the Company&rsquo;s earnings and would be
recognized in the quarter during which the lower rate is enacted.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Federal regulators periodically examine our business, and we
may be required to remediate adverse examination findings.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The FRB, the OCC and the FDIC, periodically
examine our business, including our compliance with laws and regulations. If, as a result of an examination, a federal banking
agency were to determine that our financial condition, capital resources, asset quality, earnings prospects, management, liquidity
or other aspects of any of our operations had become unsatisfactory, or that we were in violation of any law or regulation, it
may take a number of different remedial actions as it deems appropriate. These actions include the power to enjoin &ldquo;unsafe
or unsound&rdquo; practices, to require affirmative action to correct any conditions resulting from any violation or practice,
to issue an administrative order that can be judicially enforced, to direct an increase in our capital, to restrict our growth,
to assess civil monetary penalties against our officers or directors, to remove officers and directors and, if it is concluded
that such conditions cannot be corrected or there is an imminent risk of loss to depositors, to terminate our deposit insurance
and place us into receivership or conservatorship. If we become subject to any regulatory actions, it could have a material adverse
effect on our business, results of operations, financial condition and growth prospects.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Legislative and regulatory actions taken now or in the future
may increase our costs and impact our business, governance structure, financial condition or results of operations.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The Dodd-Frank Wall Street Reform and Consumer
Protection Act (&ldquo;Dodd-Frank Act&rdquo;), among other things, imposed new capital requirements on bank holding companies;
changed the base for FDIC insurance assessments to a bank's average consolidated total assets minus average tangible equity, rather
than upon its deposit base; permanently raised the current standard deposit insurance limit to $250,000; and expanded the FDIC's
authority to raise insurance premiums. The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (the &ldquo;Dodd-Frank
Act&rdquo;) established the Consumer Financial Protection Bureau as an independent entity within the FRB, which has broad rulemaking,
supervisory and enforcement authority over consumer financial products and services, including deposit products, residential mortgages,
home-equity loans and credit cards and contains provisions on mortgage-related matters, such as steering incentives, determinations
as to a borrower's ability to repay and prepayment penalties. Although the applicability of certain elements of the Dodd-Frank
Act is limited to institutions with more than $10&nbsp;billion in assets, there can be no guarantee that such applicability will
not be extended in the future or that regulators or other third parties will not seek to impose such requirements on institutions
with less than $10 billion in assets, such as Esquire Bank.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Compliance with the Dodd-Frank Act and its implementing
regulations has and will continue to result in additional operating and compliance costs that could have a material adverse effect
on our business, financial condition, results of operations and growth prospects.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In addition, new proposals for legislation continue
to be introduced in the U.S. Congress that could further substantially increase regulation of the bank and non-bank financial services
industries and impose restrictions on the operations and general ability of firms within the industry to conduct business consistent
with historical practices. Federal and state regulatory agencies also frequently adopt changes to their regulations or change the
manner in which existing regulations are applied. Certain aspects of current or proposed regulatory or legislative changes to laws
applicable to the financial industry, if enacted or adopted, may impact the profitability of our business activities, require more
oversight or change certain of our business practices, including the ability to offer new products, obtain financing, attract deposits,
make loans and achieve satisfactory interest spreads and could expose us to additional costs, including increased compliance costs.
These changes also may require us to invest significant management attention and resources to make any necessary changes to operations
to comply and could have an adverse effect on our business, financial condition and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>As a result of the Dodd-Frank Act and recent rulemaking, we are
subject to more stringent capital requirements.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In July 2013, the U.S. federal banking authorities
approved new regulatory capital rules implementing the Basel III regulatory capital reforms effecting certain changes required
by the Dodd-Frank Act. The new regulatory capital requirements are generally applicable to all U.S. banks as well as to bank and
saving and loan holding companies, other than &ldquo;small bank holding companies&rdquo; (generally bank holding companies with
consolidated assets of less than $1.0&nbsp;billion, such as the Company). The new regulatory capital rules not only increase most
of the required minimum regulatory capital ratios, but also introduce a new common equity Tier&nbsp;1 capital ratio and the concept
of a capital conservation buffer. The new regulatory capital rules also expand the current definition of capital by establishing
additional criteria that capital instruments must meet to be considered additional Tier&nbsp;1 and Tier&nbsp;2 capital. In order
to be a &ldquo;well-capitalized&rdquo; depository institution under the new regime, an institution must maintain a common equity
Tier&nbsp;1 capital ratio of 6.5% or more; a Tier&nbsp;1 capital ratio of 8% or more; a total capital ratio of 10% or more; and
a leverage ratio of 5% or more. Institutions must also maintain a capital conservation buffer consisting of common equity Tier&nbsp;1
capital. The new regulatory capital rules became effective as applied to Esquire Bank on January 1, 2015 with a phase-in period
that generally extends through January&nbsp;1, 2019 for many of the changes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Additionally, on November 2, 2012, the OCC
notified Esquire Bank that it had established minimum capital ratios for Esquire Bank requiring Esquire Bank to maintain, commencing December 1, 2012, a Tier 1 leverage capital ratio of 9.0%, a Tier1 risk-based capital ratio of 11.0% and a total
risk-based capital to risk-weighted assets ratio of 13.0%.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The failure to meet applicable regulatory capital
requirements, including the minimum capital requirements established by the OCC, could result in one or more of our regulators
placing limitations or conditions on our activities, including our growth initiatives, or restricting the commencement of new activities,
and could affect customer and investor confidence, our costs of funds and FDIC insurance costs, our ability to pay dividends on
our common stock, our ability to make acquisitions, and our business, results of operations and financial conditions, generally.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>We are subject to the Community Reinvestment Act and fair lending
laws, and failure to comply with these laws could lead to material penalties.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The Community Reinvestment Act (&ldquo;CRA&rdquo;),
the Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose nondiscriminatory lending
requirements on financial institutions. The Consumer Financial Protection Bureau, the United States Department of Justice and other
federal agencies are responsible for enforcing these laws and regulations. A successful challenge to an institution&rsquo;s performance
under the CRA or fair lending laws and regulations could result in a wide variety of sanctions, including the required payment
of damages and civil money penalties, injunctive relief, imposition of restrictions on mergers and acquisitions activity and restrictions
on expansion activity. Private parties may also have the ability to challenge an institution&rsquo;s performance under fair lending
laws in private class action litigation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>The FASB has recently issued an accounting standard update that
will result in a significant change in how we recognize credit losses and may have a material impact on our financial condition
or results of operations.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In June 2016, the Financial Accounting Standards
Board (&quot;FASB&quot;) issued an accounting standard update, &ldquo;Financial Instruments-Credit Losses (Topic 326), Measurement
of Credit Losses on Financial Instruments,&rdquo; which replaces the current &ldquo;incurred loss&rdquo; model for recognizing
credit losses with an &ldquo;expected loss&rdquo; model referred to as the Current Expected Credit Loss (&quot;CECL&quot;) model.
Under the CECL model, we will be required to present certain financial assets carried at amortized cost, such as loans held for
investment and held-to-maturity debt securities, at the net amount expected to be collected. The measurement of expected credit
losses is to be based on information about past events, including historical experience, current conditions, and reasonable and
supportable forecasts that affect the collectability of the reported amount. This measurement will take place at the time the financial
asset is first added to the balance sheet and periodically thereafter. This differs significantly from the &ldquo;incurred loss&rdquo;
model required under current generally accepted accounting principles (&quot;GAAP&quot;), which delays recognition until it is
probable a loss has been incurred. Accordingly, we expect that the adoption of the CECL model will materially affect how we determine
our allowance for loan losses and could require us to significantly increase our allowance. Moreover, the CECL model may create
more volatility in the level of our allowance for loan losses. If we are required to materially</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">increase our level of allowance for loan losses for any reason,
such increase could adversely affect our business, financial condition and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The new CECL standard will become effective
for us for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years. We are currently evaluating
the impact the CECL model will have on our accounting, but we expect to recognize a one-time cumulative-effect adjustment to our
allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective, consistent
with regulatory expectations set forth in interagency guidance issued at the end of 2016. We cannot yet determine the magnitude
of any such one-time cumulative adjustment or of the overall impact of the new standard on our financial condition or results of
operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>FDIC deposit insurance assessments may continue to materially
increase in the future, which would have an adverse effect on earnings.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">As a member institution of the FDIC, our subsidiary,
Esquire Bank, is assessed a quarterly deposit insurance premium. Failed banks nationwide have significantly depleted the insurance
fund and reduced the ratio of reserves to insured deposits. The FDIC has adopted a Deposit Insurance Fund Restoration Plan, which
requires the FDIC&rsquo;s Deposit Insurance Fund (the &ldquo;DIF&rdquo;) to attain a 1.35% reserve ratio by September&nbsp;30,
2020. As a result of this requirement, Esquire Bank could be required to pay significantly higher premiums or additional special
assessments that would adversely affect its earnings, thereby reducing the availability of funds to pay dividends to us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Monetary policies and regulations of the Federal Reserve could
adversely affect our business, financial condition and results of operations.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In addition to being affected by general economic
conditions, our earnings and growth are affected by the policies of the FRB. An important function of the FRB is to regulate the
money supply and credit conditions. Among the instruments used by the FRB to implement these objectives are open market purchases
and sales of U.S. government securities, adjustments of the discount rate and changes in banks' reserve requirements against bank
deposits. These instruments are used in varying combinations to influence overall economic growth and the distribution of credit,
bank loans, investments and deposits. Their use also affects interest rates charged on loans or paid on deposits.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The monetary policies and regulations of the
FRB have had a significant effect on the operating results of commercial banks in the past and are expected to continue to do so
in the future. The effects of such policies upon our business, financial condition and results of operations cannot be predicted.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>We face a risk of noncompliance and enforcement action with the
Bank Secrecy Act and other anti-money laundering statutes and regulations.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The Bank Secrecy Act, the USA Patriot Act and
other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money
laundering program and to file reports such as suspicious activity reports and currency transaction reports. We are required to
comply with these and other anti-money laundering requirements. The federal banking agencies and Financial Crimes Enforcement Network
are authorized to impose significant civil money penalties for violations of those requirements and have recently engaged in coordinated
enforcement efforts against banks and other financial services providers with the U.S. Department of Justice, Drug Enforcement
Administration and Internal Revenue Service. We are also subject to increased scrutiny of compliance with the rules enforced by
the Office of Foreign Assets Control. If our policies, procedures and systems are deemed deficient, we would be subject to liability,
including fines and regulatory actions, which may include restrictions on our ability to pay dividends and the necessity to obtain
regulatory approvals to proceed with certain aspects of our business plan, including our acquisition plans.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Failure to maintain and implement adequate programs
to combat money laundering and terrorist financing could also have serious reputational consequences for us. Any of these results
could have a material adverse effect on our business, financial condition, results of operations and growth prospects.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>The FRB may require us to commit capital resources to support
Esquire Bank.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">As a matter of policy, the FRB expects a bank
holding company to act as a source of financial and managerial strength to a subsidiary bank and to commit resources to support
such subsidiary bank. The Dodd-Frank Act codified the FRB's policy on serving as a source of financial strength. Under the &ldquo;source
of strength&rdquo; doctrine, the FRB may require a bank holding company to make capital injections into a troubled subsidiary bank
and may charge the bank holding company with engaging in unsafe and unsound practices for failure to commit resources to a subsidiary
bank. A capital injection may be required at times when the holding company may not have the resources to provide it and therefore
may be required to borrow the funds or raise capital. Any loans by a holding company to its subsidiary banks are subordinate in
right of payment to deposits and to certain other indebtedness of such subsidiary bank. In the event of a bank holding company&rsquo;s
bankruptcy, the bankruptcy trustee will assume any commitment by the holding company to a federal bank regulatory agency to maintain
the capital of a subsidiary bank. Moreover, bankruptcy law provides that claims based on any such commitment will be entitled to
a priority of payment over the claims of the institution's general unsecured creditors, including the holders of its note obligations.
Thus, any borrowing that must be done by the Company to make a required capital injection becomes more difficult and expensive
and could have an adverse effect on our business, financial condition and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>We could be adversely affected by the soundness of other financial
institutions and other third parties we rely on.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Financial services institutions are interrelated
as a result of trading, clearing, counterparty or other relationships. We have exposure to many different industries and counterparties,
and routinely execute transactions with counterparties in the financial services industry, including commercial banks, brokers
and dealers, investment banks and other institutional customers. Many of these transactions expose us to credit risk in the event
of a default by a counterparty or client. In addition, our credit risk may be exacerbated when our collateral cannot be foreclosed
upon or is liquidated at prices not sufficient to recover the full amount of the credit or derivative exposure due. Furthermore,
successful operation of our merchant services business depends on the soundness of ISOs, third party processors, clearing agents
and others that we rely on to conduct our merchant business. Any losses resulting from such third parties could adversely affect
our business, financial condition and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>We depend on the accuracy and completeness of information about
customers and counterparties.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In deciding whether to extend credit or enter
into other transactions with our existing and potential customers and counterparties, we may rely on information furnished to us
by or on behalf of our existing and potential customers and counterparties, including financial statements and other financial
information. We also may rely on representations of our existing and potential customers and counterparties as to the accuracy
and completeness of that information and, with respect to financial statements, on reports of independent auditors. In deciding
whether to extend credit, we may rely upon our existing and potential customers&rsquo; representations that their respective financial
statements conform to U.S. generally accepted accounting principles, or GAAP, and present fairly, in all material respects, the
financial condition, results of operations and cash flows of the customer. We also may rely on customer and counterparty representations
and certifications, or other auditors&rsquo; reports, with respect to the business and financial condition of our existing and
potential customers and counterparties. Our financial condition, results of operations, financial reporting and reputation could
be negatively affected if we rely on materially misleading, false, incomplete, inaccurate or fraudulent information provided by
us by or on behalf of our existing or potential customers or counterparties.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Our accounting estimates and risk management processes and controls
rely on analytical and forecasting techniques and models and assumptions, which may not accurately predict future events. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our accounting policies and methods are fundamental
to how we record and report our financial condition and results of operations. Our management must exercise judgment in selecting
and applying many of these accounting policies and methods so they comply with GAAP and reflect management's judgment of the most
appropriate manner to report our financial condition and results. In some cases, management must select the accounting policy or
method to apply from two or more alternatives, any of which may be reasonable under the circumstances, yet which may result in
our reporting materially different results than would have been reported under a different alternative.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Certain accounting policies are critical to
presenting our financial condition and results of operations. They require management to make difficult, subjective or complex
judgments about matters that are uncertain. Materially different amounts could be reported under different conditions or using
different assumptions or estimates. These critical accounting policies include the allowance for loan losses and income taxes.
Because of the uncertainty of estimates involved in these matters, we may be required to do one or more of the following: significantly
increase the allowance for loan losses or sustain loan losses that are significantly higher than the reserve provided; reduce the
carrying value of an asset measured at fair value; or significantly increase our accrued tax liability. Any of these could have
a material adverse effect on our business, financial condition or results of operations. See &quot;Management's Discussion and
Analysis of Financial Condition and Results of Operations&quot;.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our internal controls, disclosure controls,
processes and procedures, and corporate governance policies and procedures are based in part on certain assumptions and can provide
only reasonable (not absolute) assurances that the objectives of the system are met. Any failure or circumvention of our controls,
processes and procedures or failure to comply with regulations related to controls, processes and procedures could necessitate
changes in those controls, processes and procedures, which may increase our compliance costs, divert management attention from
our business or subject us to regulatory actions and increased regulatory scrutiny. Any of these could have a material adverse
effect on our business, financial condition or results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Risks Related to the Offering and an Investment
in Our Common Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>An active, liquid trading market for our common stock may not
develop, and you may not be able to sell your common stock at or above the public offering price, or at all.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Prior to this offering, there has been no public
market for our common stock. An active trading market for shares of our common stock may never develop or be sustained following
this offering. If an active trading market does not develop, you may have difficulty selling your shares of common stock at an
attractive price, or at all. The public offering price for our common stock will be determined by negotiations between us and the
underwriter and may not be indicative of prices that will prevail in the open market following this offering. Consequently, you
may not be able to sell your common stock at or above the public offering price or at any other price or at the time that you would
like to sell. An inactive market may also impair our ability to raise capital by selling our common stock and may impair our ability
to expand our business by using our common stock as consideration in an acquisition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>The price of our common stock could be volatile
following this offering.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The market price of our common stock following
this offering may be volatile and could be subject to wide fluctuations in price in response to various factors, some of which
are beyond our control. These factors include, among other things:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>general economic conditions and overall market fluctuations;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>actual or anticipated fluctuations in our quarterly or annual operating results;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>changes in accounting standards, policies, guidance, interpretations or principles;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the public reaction to our press releases, our other public announcements and our filings with the SEC;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>changes in financial estimates and recommendations by securities analysts following our stock, or the failure of securities
analysts to cover our common stock after this offering;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>changes in earnings estimates by securities analysts or our ability to meet those estimates;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the operating and stock price performance of other comparable companies;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the trading volume of our common stock;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>new technology used, or services offered, by competitors;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>changes in business, legal or regulatory conditions, or other developments affecting the financial services industry, participants
in our industry, and publicity regarding our business or any of our significant customers or competitors; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>future sales of our common stock by us, directors, executives and significant stockholders, including the sale of our common
stock by our existing stockholders who are not subject to the lock-up agreements described in &ldquo;Underwriting&rdquo;.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The realization of any of the risks described
in this &ldquo;Risk Factors&rdquo; section could have a material adverse effect on the market price of our common stock and cause
the value of your investment to decline. In addition, the stock market experiences extreme volatility that has often been unrelated
to the operating performance of particular companies. These types of broad market fluctuations may adversely affect investor confidence
and could affect the trading price of our common stock over the short, medium or long term, regardless of our actual performance.
If the market price of our common stock reaches an elevated level following this offering, it may materially and rapidly decline.
In the past, following periods of volatility in the market price of a company&rsquo;s securities, stockholders have often instituted
securities class action litigation. If we were to be involved in a class action lawsuit, we could incur substantial costs and it
could divert the attention of senior management and have a material adverse effect on our business, financial condition and results
of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Our management will have broad discretion as to the use of proceeds
from this offering, and we may not use the proceeds effectively.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="color: windowtext">We are not required
to apply any portion of the net proceeds of this offering for any particular purpose. Accordingly, our management will have broad
discretion as to the application of the net proceeds of this offering and could use them for purposes other than those contemplated
at the time of this offering. At March 31, 2017, our total stockholders&rsquo; equity was $53.2 million and our total return on
average common equity was 6.33% for the three months ended March 31, 2017. </FONT>We expect our total stockholders&rsquo; equity
to be $[<FONT STYLE="font-family: Symbol">&middot;</FONT>] million upon completion of the offering, based on the midpoint of the
estimated initial public offering price range set forth on the cover page of this prospectus. A portion of the proceeds from this
offering are expected to be used to provide additional capital as a cushion against minimum regulatory capital requirements, which<FONT STYLE="color: windowtext">
may tend to reduce our return on equity as opposed to if such proceeds were used for further growth. Our stockholders may not agree
with the manner in which our management chooses to allocate and invest the net proceeds. We may not be successful in using the
net proceeds from this offering to increase our profitability or market value and we cannot predict whether the proceeds will be
invested to yield a favorable return.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>The reduced disclosures and relief from certain other significant
disclosure requirements that are available to emerging growth companies may make our common stock less attractive to investors.
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We are an &ldquo;emerging growth company,&rdquo;
as defined in the JOBS Act, and we intend to take advantage of certain exemptions from various reporting requirements that apply
to other public companies that are not &ldquo;emerging growth companies.&rdquo; These exemptions include the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>not being required to comply with the auditor attestation requirements of Section&nbsp;404 of the Sarbanes-Oxley Act;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>less extensive disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">exemptions from the requirements to hold nonbinding advisory votes
on executive compensation and stockholder approval of any golden parachute payments not previously approved. </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In addition, even if we comply with the greater
obligations of public companies that are not emerging growth companies immediately after this offering, we may avail ourselves
of the reduced requirements applicable to emerging growth companies from time to time in the future, so long as we are an emerging
growth company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We will remain an emerging growth company for
up to five years, though we may cease to be an emerging</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">growth company earlier under certain circumstances, including if,
before the end of such five years, we are deemed to be a large accelerated filer under the rules of the SEC (which depends on,
among other things, having a market value of common stock held by non-affiliates in excess of $700 million). Investors and securities
analysts may find it more difficult to evaluate our common stock because we will rely on one or more of these exemptions. If, as
a result, some investors find our common stock less attractive, there may be a less active trading market for our common stock,
which could result in a reductions and greater volatility in the prices of our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>The obligations associated with being a public company will require
significant resources and management attention, which may divert from our business operations.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">As a result of this offering, we will become
subject to the reporting requirements of the Securities Exchange Act of 1934, or Exchange Act, and the Sarbanes-Oxley Act of 2002,
or the Sarbanes-Oxley Act. The Exchange Act requires that we file annual, quarterly and current reports with respect to our business
and financial condition with the SEC. The Sarbanes-Oxley Act requires, among other things, that we establish and maintain effective
internal controls and procedures for financial reporting. As a result, we will incur significant legal, accounting and other expenses
that we did not previously incur. We anticipate that these costs will materially increase our general and administrative expenses.
Furthermore, the need to establish the corporate infrastructure demanded of a public company may divert management's attention
from implementing our strategic plan, which could prevent us from successfully implementing our growth initiatives and improving
our business, results of operations and financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">As an &ldquo;emerging growth company&rdquo;
as defined in the JOBS Act, we intend to take advantage of certain temporary exemptions from various reporting requirements, including
reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and an exemption from
the requirement to obtain an attestation from our auditors on management's assessment of our internal control over financial reporting.
When these exemptions cease to apply, we expect to incur additional expenses and devote increased management effort toward ensuring
compliance with them. We cannot predict or estimate the amount of additional costs we may incur as a result of becoming a public
company or the timing of such costs.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>You will incur immediate dilution as a result of this offering.
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="color: windowtext">If you purchase
our common stock in this offering, you will pay more for your shares than the net tangible book value per share immediately following
consummation of this offering. As a result, you will incur immediate dilution of $</FONT>[<FONT STYLE="font-family: Symbol">&middot;</FONT>]
<FONT STYLE="color: windowtext">per share representing the difference between the offering price of $</FONT>[<FONT STYLE="font-family: Symbol">&middot;</FONT>]<FONT STYLE="color: windowtext">,
the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus, and our adjusted
net tangible book value per share as of </FONT>March 31, 2017<FONT STYLE="color: windowtext"> of $</FONT>[<FONT STYLE="font-family: Symbol">&middot;</FONT>]
<FONT STYLE="color: windowtext">per share of common stock. This represents </FONT>[<FONT STYLE="font-family: Symbol">&middot;</FONT>]<FONT STYLE="color: windowtext">%
dilution from the midpoint of the initial public offering price set forth on the cover page of this prospectus. Accordingly, if
we were to be liquidated at our book value immediately following this offering, you would not receive the full amount of your investment.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>We have not historically declared or paid cash dividends on our
common stock and we do not expect to pay dividends on our common stock in the foreseeable future. Consequently, your only opportunity
to achieve a return on your investment in the foreseeable future is if the price of our common stock appreciates.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The holders of our common stock will receive
dividends if and when declared by our board of directors out of legally available funds. Our board of directors has not declared
a dividend on our common stock since our inception. Any future determination relating to our dividend policy will be made at the
discretion of our board of directors and will depend on a number of factors, including our future earnings, capital requirements,
financial condition, future prospects, regulatory restrictions, and other factors that our board of directors may deem relevant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our principal business operations are conducted
through our subsidiary, Esquire Bank. Cash available to pay dividends to our stockholders is derived primarily, if not entirely,
from dividends paid by Esquire Bank to us. The ability of Esquire Bank to pay dividends to us, as well as our ability to pay dividends
to our stockholders, will continue to be subject to, and limited by, certain legal and regulatory restrictions. Further, any lenders
making loans to us may impose financial covenants that may be more restrictive with respect to dividend payments than the regulatory
requirements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>If equity research analysts do not publish research or reports
about our business, or if they do publish such reports but issue unfavorable commentary or downgrade our common stock, the price
and trading volume of our common stock could decline.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The trading market for our common stock could
be affected by whether equity research analysts publish research or reports about us and our business. We cannot predict at this
time whether any research analysts will publish research and reports on us and our common stock. If one or more equity analysts
do cover us and our common stock and publish research reports about us, the price of our stock could decline if one or more securities
analysts downgrade our stock or if those analysts issue other unfavorable commentary or cease publishing reports about us or our
business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">If any of the analysts who elect to cover us
downgrades our stock, our stock price could decline rapidly. If any of these analysts ceases coverage of us, we could lose visibility
in the market, which in turn could cause our common stock price or trading volume to decline and our common stock to be less liquid.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>If a substantial number of shares become available for sale and
are sold in a short period of time, the market price of our common stock could decline.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="color: windowtext">If our existing
stockholders sell substantial amounts of our common stock in the public market following this offering, the market price of our
common stock could decrease significantly. The perception in the public market that our existing stockholders might sell shares
of common stock could also depress our market price. Upon completion of this offering, we will have </FONT>[<FONT STYLE="font-family: Symbol">&middot;</FONT>]
<FONT STYLE="color: windowtext">shares of our common stock outstanding, or </FONT>[<FONT STYLE="font-family: Symbol">&middot;</FONT>]
<FONT STYLE="color: windowtext">shares if the underwriter exercises in full its option to purchase additional shares. Our directors,
executive officers, the selling stockholders and certain additional other holders of our common stock, collectively representing
</FONT>[<FONT STYLE="font-family: Symbol">&middot;</FONT>]<FONT STYLE="color: windowtext">% of our common shares outstanding upon
completion of this offering, or </FONT>[<FONT STYLE="font-family: Symbol">&middot;</FONT>]<FONT STYLE="color: windowtext">% if
the underwriter exercises in full its option to purchase additional shares, will be subject to the lock-up agreements described
in &ldquo;Underwriting&rdquo; and the Rule 144 holding period requirements described in &ldquo;Shares Eligible for Future Sale.&rdquo;
After all of the lock-up periods have expired and the holding periods have elapsed, </FONT>[<FONT STYLE="font-family: Symbol">&middot;</FONT>]
<FONT STYLE="color: windowtext">additional shares of our outstanding common stock will be eligible for sale in the public market.
In addition, the underwriter may, at any time and without notice, release all or a portion of the shares subject to lock-up agreements.
The market price of shares of our common stock may drop significantly when the restrictions on resale by our existing stockholders
lapse. A decline in the price of shares of our common stock might impede our ability to raise capital through the issuance of additional
shares of our common stock or other equity securities and could result in a decline in the value of the shares of our common stock
purchased in this offering.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="color: windowtext">In addition,
one of our stockholders, CJA Private Equity Financial Restructuring Master Fund I, LP, has piggyback registration rights pursuant
to a registration rights agreement with respect to the shares of our common stock and shares of our </FONT>Series B Preferred Stock<FONT STYLE="color: windowtext">
that it owns. As of the date of this prospectus, CJA Private Equity Financial Restructuring Master Fund I, LP owned 497,815 shares
of our common stock, and 66,985 shares of our</FONT> Series B Preferred Stock.<FONT STYLE="color: windowtext"> </FONT>Following
our initial public offering, to the extent the holder of our Series B Preferred Shares remains a holder of our common stock or
our Series B Preferred Shares, it may exercise its &ldquo;piggyback&rdquo; registration rights in connection with future offerings
of our common stock, other than registration statements filed on Forms S-4 or S-8.<FONT STYLE="color: windowtext"> </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Our directors and executive officers beneficially own a significant
portion of our common stock and have substantial influence over us.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="color: windowtext">Our directors
and executive officers, as a group, beneficially owned approximately </FONT>28.2<FONT STYLE="color: windowtext">% of our outstanding
common stock as of </FONT>May 23, 2017<FONT STYLE="color: windowtext">. As a result of this level of ownership, our directors and
executive officers have the ability, by taking coordinated action, to exercise significant influence over our affairs and policies.
The interests of our directors and executive officers may not be consistent with your interests as a stockholder. This influence
may also have the effect of delaying or preventing changes of control or changes in management, or limiting the ability of our
other stockholders to approve transactions that they may deem to be in the best interests of our Company.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>A future issuance of stock could dilute the value of our common
stock.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="color: windowtext">We may sell
additional shares of common stock, or securities convertible into or exchangeable for such shares, in subsequent public or private
offerings. Upon completion of this offering, there will be </FONT>[<FONT STYLE="font-family: Symbol">&middot;</FONT>] <FONT STYLE="color: windowtext">shares
of our </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="color: windowtext">common stock issued and outstanding,
or [<FONT STYLE="font-family: Symbol">&middot;</FONT>] shares if the underwriter exercises in full its option to purchase additional
shares. Those shares outstanding do not include the potential issuance, as of </FONT>March 31, 2017<FONT STYLE="color: windowtext">,
of </FONT>1,013,045 <FONT STYLE="color: windowtext">shares of our common stock subject to issuance upon exercise of outstanding
stock options under our 2007 Stock Option Plan and our 2011 </FONT>Stock Compensation Plan<FONT STYLE="color: windowtext">, </FONT>11,562<FONT STYLE="color: windowtext">
additional shares of our common stock that were reserved for issuance under our </FONT>plans <FONT STYLE="color: windowtext">at
</FONT>March 31, 2017 or<FONT STYLE="color: windowtext"> </FONT>66,985 shares of Series B Preferred Stock that are not convertible
by the holder, but are convertible on a one for one basis into shares of our common stock under certain circumstances. <FONT STYLE="color: windowtext">Future
issuance of any new shares could cause further dilution in the value of our outstanding shares of common stock. We cannot predict
the size of future issuances of our common stock, or securities convertible into or exchangeable for such shares, or the effect,
if any, that future issuances and sales of shares of our common stock will have on the market price of our common stock. Sales
of substantial amounts of our common stock (including shares issued in connection with an acquisition), or the perception that
such sales could occur, may adversely affect prevailing market prices of our common stock.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Our common stock is subordinate to our existing and future indebtedness
and preferred stock.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Shares of our common stock are equity interests
and do not constitute indebtedness. As such, our common stock ranks junior to all our customer deposits and indebtedness, and other
non-equity claims on us, with respect to assets available to satisfy claims. Additionally, holders of common stock are subject
to the prior liquidation rights of the holders of our Series B Preferred Stock and may be subject to the prior dividend and liquidation
rights of other series of preferred stock we may issue in the future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Provisions in our charter documents, Maryland law and federal
law may have an anti-takeover effect, and there are substantial regulatory limitations on changes of control of bank holding companies.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Provisions of our charter documents, the Maryland
General Corporation Law, or the MGCL, and federal banking law could make it more difficult for a third party to acquire us, even
if doing so would be perceived to be beneficial by our stockholders. These provisions include:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>staggered terms for directors, who may be removed from office only for cause;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>a provision establishing certain advance notice procedures for nomination of candidates for election as directors and for stockholder
proposals;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>a provision that any special meeting of our stockholders may be called only by a majority of the board of directors, the President
or a holder or group of holders of at least 50% of our shares entitled to vote at the meeting; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the ability for our board of directors, without stockholder approval, to increase or decrease the number of authorized shares
without stockholder approval and the ability for our board of directors to issue our preferred stock and to determine the terms
of such preferred stock.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Furthermore, with certain limited exceptions,
federal regulations prohibit a person or company or a group of persons deemed to be &ldquo;acting in concert&rdquo; from, directly
or indirectly, acquiring more than 10% (5% if the acquirer is a bank holding company) of any class of our voting stock or obtaining
the ability to control in any manner the election of a majority of our directors or otherwise direct the management or policies
of our company without prior notice or application to and the approval of the Federal Reserve. Accordingly, prospective investors
need to be aware of and comply with these requirements, if applicable, in connection with any purchase of shares of our common
stock. Moreover, the combination of these provisions effectively inhibits certain mergers or other business combinations, which,
in turn, could adversely affect the market price of our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>An investment in our common stock is not an insured deposit and
is not guaranteed by the FDIC, so you could lose some or all of your investment.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">An investment in our common stock is not
a bank deposit and, therefore, is not insured against loss or guaranteed by the FDIC, any other deposit insurance fund or by
any other public or private entity. An investment in our common stock is inherently risky for the reasons described herein.
As a result, if you acquire our common stock, you could lose some or all of your investment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><A NAME="a_003"></A>CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">This prospectus contains forward-looking statements
within the meaning of the federal securities laws. These forward-looking statements reflect our current views with respect to,
among other things, future events and our financial performance. These statements are often, but not always, made through the use
of words or phrases such as &ldquo;may,&rdquo; &ldquo;might,&rdquo; &ldquo;should,&rdquo; &ldquo;could,&rdquo; &ldquo;predict,&rdquo;
&ldquo;potential,&rdquo; &ldquo;believe,&rdquo; &ldquo;expect,&rdquo; &ldquo;attribute,&rdquo; &ldquo;continue,&rdquo; &ldquo;will,&rdquo;
&ldquo;anticipate,&rdquo; &ldquo;seek,&rdquo; &ldquo;estimate,&rdquo; &ldquo;intend,&rdquo; &ldquo;plan,&rdquo; &ldquo;projection,&rdquo;
&ldquo;goal,&rdquo; &ldquo;target,&rdquo; &ldquo;outlook,&rdquo; &ldquo;aim,&rdquo; &ldquo;would,&rdquo; &ldquo;annualized&rdquo;
and &ldquo;outlook,&rdquo; or the negative version of those words or other comparable words or phrases of a future or forward-looking
nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections
about our industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently
uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future
performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although we believe
that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove
to be materially different from the results expressed or implied by the forward-looking statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="background-color: white">The following
factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed
in the forward-looking statements:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">our ability to manage our operations under the current economic conditions
nationally and in our market area;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">adverse changes in the financial industry, securities, credit and
national local real estate markets (including real estate values);</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">risks related to a high concentration of loans secured by real estate
located in our market area;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">risks related to a high concentration of loans and deposits dependent
upon the legal and &ldquo;litigation&rdquo; market;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">the impact of any potential strategic transactions;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">our ability to enter new markets successfully and capitalize on growth
opportunities;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">significant increases in our loan losses, including as a result of
our inability to resolve classified and non-performing assets or reduce risks associated with our loans, and management&rsquo;s
assumptions in determining the adequacy of the allowance for loan losses;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">interest rate fluctuations, which could have an adverse effect on
our profitability;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">external
                                         economic and/or market factors, such as changes in monetary and fiscal policies and laws,
                                         including the interest rate policies of the FRB, inflation or deflation, changes in the
                                         demand for loans, and fluctuations in consumer spending, borrowing and savings habits,
                                         which may have an adverse impact on our financial condition;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">continued or increasing competition from other financial institutions,
credit unions, and non-bank financial services companies, many of which are subject to different regulations than we are;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">credit risks of lending activities, including changes in the level
and trend of loan delinquencies and write-offs and in our allowance for loan losses and provision for loan losses;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">our success in increasing our legal and &ldquo;litigation&rdquo; market
lending;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">our ability to attract and maintain deposits and our success in introducing
new financial products;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">losses suffered by merchants or ISOs with whom we do business; </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">our ability to effectively manage risks related to our merchant services
business;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">our ability to leverage the professional and personal relationships
of our board members and advisory board members;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">changes in interest rates generally, including changes in the relative
differences between short-term and long-term interest rates and in deposit interest rates, that may affect our net interest margin
and funding sources;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">fluctuations in the demand for loans;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">technological changes that may be more difficult or expensive than
expected;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">changes in consumer spending, borrowing and savings habits;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">declines in the yield on our assets resulting from the current low
interest rate environment;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">declines in our merchant processing income as a result of reduced
demand, competition and changes in laws or government regulations or policies affecting financial institutions, including the Dodd-Frank
Act and the JOBS Act, which could result in, among other things, increased deposit insurance premiums and assessments, capital
requirements, regulatory fees and compliance costs, particularly the new capital regulations, and the resources we have available
to address such changes;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">changes in accounting policies and practices, as may be adopted by
the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company
Accounting Oversight Board;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">loan delinquencies and changes in the underlying cash flows of our
borrowers;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">the impairment of our investment securities;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">our ability to control costs and expenses, particularly those associated
with operating as a publicly traded company;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">the failure or security breaches of computer systems on which we depend;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">political instability;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">acts of war or terrorism;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">competition and innovation with respect to financial products and
services by banks, financial institutions and non-traditional providers, including retail businesses and technology companies;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">changes in our organization and management and our ability to retain
or expand our management team and our board of directors, as necessary;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">the costs and effects of legal, compliance and regulatory actions,
changes and developments, including the initiation and resolution of legal proceedings, regulatory or other governmental inquiries
or investigations, and/or the results of regulatory examinations and reviews;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">the ability of key third-party service providers to perform their
obligations to us; and</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">other economic, competitive, governmental, regulatory and operational
factors affecting our operations, pricing, products and services described elsewhere in this prospectus.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The foregoing factors should not be construed
as exhaustive and should be read in conjunction with other cautionary statements that are included in this prospectus. If one or
more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect,
actual results may differ materially from what we anticipate. Accordingly, you should not place undue reliance on any such forward-looking
statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation
to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.
New risks and uncertainties arise from time to time, and it is not possible for us to predict those events or how they may affect
us. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in any forward-looking statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><A NAME="a_004"></A>USE OF PROCEEDS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Assuming a public offering price of $[<FONT STYLE="font-family: Symbol">&middot;</FONT>]
per share, we estimate that the net proceeds from the sale of the shares of common stock by us will be approximately $[<FONT STYLE="font-family: Symbol">&middot;</FONT>]
million (or approximately $[<FONT STYLE="font-family: Symbol">&middot;</FONT>] million if the underwriter exercises in full its
option to purchase additional shares of common stock from us), after deducting the estimated underwriting discounts and commissions
and estimated offering expenses payable by us. Each $1.00 increase (decrease) in the per share public offering price would increase
(decrease) the net proceeds to us of this offering by approximately $[<FONT STYLE="font-family: Symbol">&middot;</FONT>] million
(or approximately $[<FONT STYLE="font-family: Symbol">&middot;</FONT>] million if the underwriter elects to exercise its purchase
option in full), after deducting estimated underwriting discounts and offering expenses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="color: windowtext">In order to
maintain </FONT><FONT STYLE="background-color: white">our capital and liquidity ratios at acceptable levels while we continue to
grow our balance sheet with commercial real estate loans and commercial loans, we have decided to undertake a public offering at
this time. Additionally, o</FONT><FONT STYLE="color: windowtext">ur lending limit is expected to increase by $[<FONT STYLE="font-family: Symbol">&middot;</FONT>]
million following the completion of this offering, which will allow us to originate larger loans and be more competitive in the
market place.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="color: windowtext">We intend to
use the net proceeds of the offering to support the growth in Esquire Bank&rsquo;s loan portfolio, including the possibility of
making larger loans due to our increased legal lending limit, to finance potential strategic acquisitions </FONT><FONT STYLE="background-color: white">to
the extent such opportunities arise</FONT><FONT STYLE="color: windowtext"> and for other general corporate purposes, which could
include other growth initiatives. We have no current plans, arrangements or understandings relating to any specific acquisition
or similar transaction and management has not yet determined the types of businesses that they might target. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our management will retain broad discretion
to allocate the net proceeds of this offering, and the precise amounts and timing of our use of the net proceeds of this offering
will depend upon market conditions, as well as other factors. Until we deploy the proceeds of this offering for the uses described
above, we expect to hold such proceeds in short-term investments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We will not receive any proceeds from the sale
of shares of our common stock by the selling stockholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><A NAME="a_005"></A>CAPITALIZATION</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="color: windowtext">The following
table shows our capitalization, including regulatory capital ratios, on a consolidated basis, as of </FONT>March 31, 2017<FONT STYLE="color: windowtext">:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>on an actual basis; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-size: 10pt">on a pro forma basis to give effect to (i) the issuance and sale by us of [<FONT STYLE="font-family: Symbol">&middot;</FONT>]
shares of common stock in this offering (assuming the underwriter does not exercise its option to purchase any additional shares
to cover</FONT> <FONT STYLE="font-size: 10pt">over-allotments,</FONT> <FONT STYLE="font-size: 10pt">if any), and the receipt and
application of the net proceeds from the sale of these shares at an initial public offering price of $[<FONT STYLE="font-family: Symbol">&middot;</FONT>]
per share and (ii) the sale by the selling stockholders of [<FONT STYLE="font-family: Symbol">&middot;</FONT>] shares of common
stock in this offering, after deducting underwriting discounts and commissions and the estimated offering expenses payable by us.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">You should read this table in conjunction with
&ldquo;Use of Proceeds,&rdquo; &ldquo;Selected Historical Consolidated Financial Data,&rdquo; &ldquo;Management&rsquo;s Discussion
and Analysis of Financial Condition and Results of Operations&rdquo; and our consolidated financial statements and the related
notes included elsewhere in this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt">At&nbsp;March&nbsp;31,&nbsp;2017</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; font-size: 8pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt">Actual</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; font-size: 8pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt">As<BR>
&nbsp;Adjusted</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; font-size: 8pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt">(dollars&nbsp;in&nbsp;thousands&nbsp;<BR>
    except&nbsp;per&nbsp;share&nbsp;data)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; font-size: 8pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(unaudited)</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -12pt; padding-left: 12pt">Stockholders&rsquo; equity:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-indent: -0.1in; padding-left: 0.1in">Preferred Stock, par value $0.01 per share; authorized&mdash;2,000,000 shares; issued and outstanding&mdash;66,985 shares</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">1</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Common stock, par value $0.01 per share; authorized&mdash;15,000,000 shares; issued and outstanding&mdash;5,003,030 shares</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Capital surplus</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">58,983</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Retained deficit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(5,011</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Accumulated other comprehensive income, net</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(779</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD STYLE="font-size: 1pt">&nbsp;</TD>
    <TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 1pt">&nbsp;</TD>
    <TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Total stockholders&rsquo; equity</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">53,244</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD STYLE="font-size: 1pt">&nbsp;</TD>
    <TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 1pt">&nbsp;</TD>
    <TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Total capitalization</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">53,244</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Capital ratios (Esquire Bank):</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Tier 1 capital to average assets for leverage</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11.60</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Tier 1 capital to risk-weighted assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15.46</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Total capital to risk-weighted assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16.59</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Common equity tier 1 capital to risk-weighted assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15.46</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Tangible common equity to tangible assets(1)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11.99</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-indent: -0.1in; padding-left: 0.1in">Per share data</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Book value per common share(2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">10.50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Tangible book value per common share(3)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">10.50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-indent: -0.25in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-indent: -0.25in"></P>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><FONT STYLE="color: windowtext">(1)</FONT></TD><TD>Tangible common equity to tangible assets is a ratio of the Company. The Company had no intangible assets as of the dates indicated.
Thus, tangible common equity to tangible assets is the same as <FONT STYLE="background-color: white">total common stockholders&rsquo;
equity to total assets. </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(2)</TD><TD>Excludes 66,985 shares of our common stock issuable under certain circumstances upon conversion by us, not the holder, of the
Series B Preferred Stock.</TD></TR></TABLE>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(3)</TD><TD>The Company had no intangible assets as of the dates indicated. Thus, tangible book value per common share is the same as book
value per common share for each of the periods indicated.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="background-color: white">&nbsp;</FONT></P>


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><A NAME="a_006"></A>DILUTION</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">If you invest in our common stock, your ownership
interest will be immediately diluted to the extent of the difference between the initial public offering price per share of our
common stock in this offering and the net tangible book value per share of common stock upon completion of this offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="color: windowtext">Net tangible
book value per common share represents the amount of our total tangible assets less total liabilities and preferred stock, divided
by the number of shares of common stock outstanding. Our net tangible book value as of </FONT>March 31<FONT STYLE="color: windowtext">,
2017 was $52.5 million, or $10.50 per share of common stock, based upon 5,003,030 shares of common stock outstanding as of such
date.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="color: windowtext">After giving
effect to the sale of [<FONT STYLE="font-family: Symbol">&middot;</FONT>] shares of our common stock by us at the initial public
offering price of $[<FONT STYLE="font-family: Symbol">&middot;</FONT>] per share, the midpoint of the estimated initial public
offering price range set forth on the cover page of this prospectus, and after deducting the estimated underwriting discounts and
commissions and estimated offering expenses payable by us, our net tangible book value as of </FONT>March 31<FONT STYLE="color: windowtext">,
2017 would have been approximately $[<FONT STYLE="font-family: Symbol">&middot;</FONT>] million, or approximately $[<FONT STYLE="font-family: Symbol">&middot;</FONT>]
per share of common stock. This represents an immediate [<FONT STYLE="font-family: Symbol">&middot;</FONT>] in net tangible book
value of $[<FONT STYLE="font-family: Symbol">&middot;</FONT>] per share to existing common stockholders, and an immediate dilution
of $[<FONT STYLE="font-family: Symbol">&middot;</FONT>] per share to investors participating in this offering. If the initial public
offering price is higher or lower, the dilution to new stockholders will be greater or less, respectively.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following table illustrates this dilution
on a per share basis:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%"><FONT STYLE="font-family: Times New Roman, Times, Serif">Assumed initial public offering price per
    share</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">[&middot;]</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Net tangible book value per share at
    March 31, 2017</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">10.50</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Increase
    in net tangible book value per share attributable to this offering</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;[&middot;]&#9;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 0.1in"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="font-size: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="font-size: 1pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="font-size: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">As adjusted tangible
    book value per share after this offering</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;[&middot;]&#9;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 0.1in"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="font-size: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="font-size: 1pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="font-size: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Dilution in net
    tangible book value per share to new investors</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#9;[&middot;]&#9;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">A $1.00 increase (or decrease) in the assumed
initial public offering price of $[<FONT STYLE="font-family: Symbol">&middot;</FONT>] per share, which is the midpoint of the estimated
initial public offering price range set forth on the cover page of this prospectus, would increase (or decrease) the as adjusted
net tangible book value per common share after this offering by approximately $[<FONT STYLE="font-family: Symbol">&middot;</FONT>],
and dilution in net tangible book value per common share to new investors by approximately $[<FONT STYLE="font-family: Symbol">&middot;</FONT>],
assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after
deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriter exercises
in full its option to purchase additional shares of our common stock in this offering, the as adjusted net tangible book value
after this offering would be $[<FONT STYLE="font-family: Symbol">&middot;</FONT>] per share, the increase in net tangible book
value to existing stockholders would be $[<FONT STYLE="font-family: Symbol">&middot;</FONT>] per share and the dilution to new
investors would be $[<FONT STYLE="font-family: Symbol">&middot;</FONT>] per share, in each case assuming an initial public offering
price of $[<FONT STYLE="font-family: Symbol">&middot;</FONT>] per share, which is the midpoint of the estimated initial public
offering price range set forth on the cover page of this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="color: windowtext">The following
table summarizes, as of </FONT>March 31<FONT STYLE="color: windowtext">, 2017, the differences between our existing stockholders
and new investors with respect to the number of shares of our common stock purchased from us, the total consideration paid and
the average price per share paid. The calculations with respect to shares purchased by new </FONT><FONT STYLE="background-color: white">investors
in this offering reflect an assumed offering price of $</FONT><FONT STYLE="color: windowtext">[<FONT STYLE="font-family: Symbol">&middot;</FONT>]
</FONT><FONT STYLE="background-color: white">per share, which is the midpoint of the estimated initial public offering price range
set forth on the cover page of this prospectus, before deducting estimated underwriting discounts and commissions and estimated
offering expenses payable by us:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Shares
    Purchased</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Total
    Consideration</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">Average
    Price</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Number</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percentage</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amount</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percentage</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Per
    Share</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 35%; text-indent: -0.1in; padding-left: 0.1in">Existing stockholders as of &nbsp;March 31, 2017</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left"></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">New Investors</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt"></FONT></TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt"></FONT></TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Total</TD><TD STYLE="font-size: 0.5pt; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-size: 0.5pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; font-size: 0.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; font-size: 0.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></P></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></P></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></P></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="background-color: white">If the
underwriter exercises its option to purchase additional shares in full, then our pro forma net tangible book value per share of
our common stock as of </FONT>March 31<FONT STYLE="color: windowtext">, 2017</FONT><FONT STYLE="background-color: white">, would
be approximately $</FONT><FONT STYLE="color: windowtext">[<FONT STYLE="font-family: Symbol">&middot;</FONT>] </FONT><FONT STYLE="background-color: white">million,
or $</FONT><FONT STYLE="color: windowtext">[<FONT STYLE="font-family: Symbol">&middot;</FONT>] </FONT><FONT STYLE="background-color: white">per
share, representing an immediate increase in net tangible book value to our existing stockholders of approximately $</FONT><FONT STYLE="color: windowtext">[<FONT STYLE="font-family: Symbol">&middot;</FONT>]</FONT><FONT STYLE="background-color: white">
per share and immediate dilution in net tangible book value to investors purchasing shares in this offering of approximately $</FONT><FONT STYLE="color: windowtext">[<FONT STYLE="font-family: Symbol">&middot;</FONT>]
</FONT><FONT STYLE="background-color: white">per share.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="background-color: white">The table
above excludes (i)&nbsp;</FONT>1,013,045 shares of common stock issuable upon the exercise of outstanding stock options at a weighted
average exercise price of $12.14 per share (333,315 shares of which are currently exercisable) as of March 31, 2017; (ii) 11,562
shares of our common stock reserved for issuance in connection with restricted stock awards, restricted stock unit awards, and
stock options available for issuance under our 2007 Stock Option Plan and our 2011 Stock Compensation Plan as of March 31, 2017;
and (iii) 66,985 shares of our common stock issuable under certain circumstances upon conversion by us, not the holder, of the
Series B Preferred Stock. <FONT STYLE="background-color: white">In connection with the exercise of any of these stock options or
if other equity awards are issued under our </FONT>2007 Stock Option Plan and<FONT STYLE="background-color: white"> 2011 Stock
Compensation Plan, or if the 66,985 shares of common stock were issued upon conversion of the </FONT>Series B Preferred Stock,<FONT STYLE="background-color: white">
investors purchasing in this offering will experience further dilution.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="background-color: white">&nbsp;</FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><A NAME="a_007"></A>DIVIDEND POLICY</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="background-color: white">We have
not historically declared or paid cash dividends on our common stock and we do not expect to pay cash dividends on our common stock
for the foreseeable future. Instead, we anticipate that all of our future earnings will be retained to support our operations and
to finance the growth and development of our business. Any future determination to pay cash dividends on our common stock will
be made by our board of directors and will depend on a number of factors, including </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="background-color: white">our historical and projected financial condition, liquidity and results of operations;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: -0.5in"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="background-color: white">our capital levels and requirements;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: -0.5in"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="background-color: white">statutory and regulatory prohibitions and other limitations;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: -0.5in"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="background-color: white">any contractual restriction on our ability to pay cash dividends, including pursuant
to the terms of any of our credit agreements or other borrowing arrangements;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: -0.5in"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="background-color: white">our business strategy;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: -0.5in"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="background-color: white">tax considerations;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: -0.5in"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="background-color: white">any acquisitions or potential acquisitions that we may examine;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: -0.5in"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="background-color: white">general economic conditions; and</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: -0.5in"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="background-color: white">other factors deemed relevant by our board of directors.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="background-color: white">As a Maryland
corporation, we are subject to certain restrictions on dividends under the Maryland General Corporation Code. Generally, Maryland
law limits cash dividends if the corporation would not be able to pay its debts in the usual course of business after giving effect
to the cash dividend or if the corporation&rsquo;s total assets would be less than the corporation&rsquo;s total liabilities plus
the amount needed to satisfy the preferential rights upon dissolution of stockholders whose preferential rights on dissolution
are superior to those receiving the distribution. We are also subject to certain restrictions on the payment of cash dividends
as a result of banking laws, regulations and policies. See &ldquo;Supervision and Regulation &ndash; Esquire Bank, National Association
&ndash; Safety and Soundness Standards.&rdquo;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="background-color: white">Because
we are a holding company, we are dependent upon the payment of dividends by Esquire Bank to us as our principal source of funds
to pay dividends in the future, if any, and to make other payments. Esquire Bank is also subject to various legal, regulatory and
other restrictions on its ability to pay dividends and make other distributions and payments to us. </FONT>A national bank may
generally declare a cash dividend, without approval from the OCC, in an amount equal to its year-to-date net income plus the prior
two years&rsquo; net income that is still available for dividends. The OCC has the authority to prohibit a national bank from paying
cash dividends if such payment is deemed to be an unsafe or unsound practice. In addition, as a depository institution the deposits
of which are insured by the FDIC, Esquire Bank may not pay cash dividends or distribute any of its capital assets while it remains
in default on any assessment due to the FDIC. Esquire Bank currently is not (and never has been) in default under any of its obligations
to the FDIC. <FONT STYLE="background-color: white">See &ldquo;Supervision and Regulation&mdash;Esquire Bank, National Association&mdash;Dividends.&rdquo;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The FRB has issued a policy statement regarding
the payment of cash dividends by bank holding companies. In general, the FRB&rsquo;s policy provides that cash dividends should
be paid only out of current earnings and only if the prospective rate of earnings retention by the bank holding company appears
consistent with the organization&rsquo;s capital needs, asset quality and overall financial condition. The FRB has the authority
to prohibit a bank holding company from paying cash dividends if such payment is deemed to be an unsafe or unsound practice.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="background-color: white">&nbsp;</FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><A NAME="a_008"></A>SELECTED HISTORICAL CONSOLIDATED FINANCIAL
DATA</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="background-color: white">The following
table sets forth selected historical consolidated financial data as of the dates and for the periods shown. The selected balance
sheet data as of December 31, 2016 and 2015 and the selected income statement data for the years then ended have been derived
from our audited consolidated financial statements included elsewhere in this prospectus. The selected balance sheet data as of
December 31, 2014 and the selected income statement data for the year then ended have been derived from our audited consolidated
financial statements that are not included in this prospectus. </FONT>The selected historical consolidated financial data
as of March 31, 2017 and for the three months ended March 31, 2017 and 2016 is derived from our unaudited interim condensed
consolidated financial statements included elsewhere in this prospectus and includes all normal and recurring adjustments that
we consider necessary for a fair presentation. The selected historical consolidated balance sheet data as of March 31, 2016
is derived from our unaudited interim condensed consolidated financial statements that are not included in this prospectus and
have not been subject to review procedures from our independent accountants. Operating results for the three months ended
March 31, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. <FONT STYLE="background-color: white">The
information should be read in conjunction with &ldquo;Risk Factors,&rdquo; &ldquo;Management&rsquo;s Discussion and Analysis of
Financial Condition and Results of Operations&rdquo; and our consolidated financial statements and the related notes included
elsewhere in the prospectus.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">At&nbsp;or&nbsp;For&nbsp;the&nbsp;Three&nbsp;Months<BR>
    &nbsp;Ended March&nbsp;31,</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="10" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">At&nbsp;or&nbsp;For&nbsp;the&nbsp;Years&nbsp;Ended&nbsp;December&nbsp;31,</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2017</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2015</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2014</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="18" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars in thousands, except
    share and per share data)</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Balance Sheet Data:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 35%; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Total assets</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">438,059</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">351,500</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">424,833</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">352,650</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">330,690</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Cash and cash equivalents</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">32,586</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,069</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">42,993</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">33,154</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">71,891</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Securities available-for-sale</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">103,652</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">79,200</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">92,645</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">84,239</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">70,925</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Loans receivable, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">287,033</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">233,294</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">275,165</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">221,720</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">170,512</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Restricted stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,746</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,487</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,649</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,430</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">237</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">383,372</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">298,693</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">370,788</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">301,687</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">290,774</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Secured borrowings</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">284</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">378</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">371</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">381</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">391</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Total stockholders&rsquo; equity</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">53,244</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">51,170</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">52,186</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">49,425</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38,542</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Income Statement Data:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Interest income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">4,432</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">3,733</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">16,168</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">12,451</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">10,714</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Interest expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">137</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">101</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">511</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">457</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">466</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Net interest income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,295</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,632</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,657</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,994</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,248</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Provision for loan losses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">150</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">145</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">595</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">930</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">300</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Net interest income after provision for loan losses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,145</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,487</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,062</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,064</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,948</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Noninterest income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,204</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">987</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,125</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,943</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,765</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Noninterest expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,024</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,420</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">14,599</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">12,171</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">11,262</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Income before income tax expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,325</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,054</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,588</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,836</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">451</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Income tax expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">510</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">411</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,766</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">664</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">410</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Net income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">815</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">643</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,822</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,172</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">41</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Less: Preferred stock dividends</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Net income available to common stockholders</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">815</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">643</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,822</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,172</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">41</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-indent: -0.1in; padding-left: 0.1in">Per Share Data:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Earnings per common share:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt">Basic</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.16</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.13</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.56</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.25</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.01</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt">Diluted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.16</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.13</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.55</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.25</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.01</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Book value per common share(1)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">10.50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">10.07</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">10.29</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">9.72</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">8.98</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Tangible book value per common share(2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">10.50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">10.07</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">10.29</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">9.72</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">8.98</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="background-color: white">&nbsp;</FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">As&nbsp;of&nbsp;and&nbsp;for&nbsp;the&nbsp;Three<BR>
    Months&nbsp;Ended&nbsp;March&nbsp;31,</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="10" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">As&nbsp;of&nbsp;and&nbsp;for&nbsp;the&nbsp;Years&nbsp;Ended&nbsp;December&nbsp;31,</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2017</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2015</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2014</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Selected Performance Ratios:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 35%; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Return on average assets</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">0.79</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">0.74</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">0.74</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">0.36</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">0.01</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Return on average common equity</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6.33</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5.32</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5.48</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.77</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.13</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Interest rate spread</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.14</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.18</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.15</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.64</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.76</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Net interest margin</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.23</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.27</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.25</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.74</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.86</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Efficiency ratio, adjusted(3)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">73.18</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">74.14</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">73.82</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">81.48</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">94.94</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Average interest earning assets to average Interest bearing liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">171.91</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">174.21</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">167.13</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">170.76</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">154.28</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Average equity to average assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12.58</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14.30</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13.83</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13.38</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11.31</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Asset Quality Ratios:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Allowance for loan losses to total loans</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.21</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.26</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.23</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.25</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.25</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Allowance for loan losses to nonperforming loans(4)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#9;N/A</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#9;N/A</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#9;N/A</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#9;N/A</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;&#9;N/A</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Net charge-offs (recoveries) to average outstanding loans</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.01</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.01</TD><TD STYLE="text-align: left">)%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.01</TD><TD STYLE="text-align: left">)%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.16</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.00</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Nonperforming loans to total loans(4)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.00</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.00</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.00</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.00</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.00</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Nonperforming loans to total assets(4)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.00</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.00</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.00</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.00</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.00</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Nonperforming assets to total assets(5)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.00</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.00</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.00</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.00</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.00</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Capital Ratios (Esquire Bank):</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Total capital to risk weighted assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16.59</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16.84</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17.25</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17.06</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18.54</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Tier 1 capital to risk weighted assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15.46</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15.68</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16.09</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15.91</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17.40</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.125in; padding-left: 0.125in">Tier 1 common equity to risk weighted assets(6)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15.46</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15.68</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16.09</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15.91</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;&#9;N/A</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Leverage capital ratio</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11.60</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11.63</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11.63</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11.90</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10.06</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-indent: -0.1in; padding-left: 0.1in">Other:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Number of offices</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Number of full-time equivalent employees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">43</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">52</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">43</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">42</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-indent: -0.25in"></P>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(1)</TD><TD>For purposes of computing book value per common share, book value equals total common stockholders&rsquo; equity. Total common
stockholders&rsquo; equity equals total stockholders&rsquo; equity, less preferred equity. Preferred equity was $720 and $1,697
at March 31, 2017 and 2016, respectively, and $720, $1,697 and $1,842 at December 31, 2016, 2015 and 2014, respectively.</TD></TR></TABLE>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(2)</TD><TD>The Company had no intangible assets as of the dates indicated. Thus, tangible book value per common share is the same as book
value per common share for each of the periods indicated.</TD></TR></TABLE>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(3)</TD><TD>Efficiency ratio represents noninterest expenses, divided by the sum of net interest income plus noninterest income. With respect
to the efficiency ratio, adjusted, noninterest income excludes gains or losses on sale of investment securities. This is a non-GAAP
financial measure. See &ldquo;Non-GAAP Financial Measure Reconciliation&rdquo; below for a reconciliation of this measure to its
most comparable GAAP measure.</TD></TR></TABLE>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(4)</TD><TD>Nonperforming loans include nonaccrual loans, loans past due 90 days and still accruing interest and loans modified under troubled
debt restructurings.</TD></TR>                              <TR STYLE="vertical-align: top">
<TD></TD><TD>(5)</TD><TD>Nonperforming assets include nonperforming loans, other real
estate owned and other foreclosed assets.</TD></TR>
<TR STYLE="vertical-align: top">
<TD></TD><TD>(6)</TD><TD>Tier 1 common equity to
risk-weighted assets ratio is required under the Basel III Final Rules which became effective for Esquire Bank on January 1, 2015.
Accordingly, this ratio is shown as not applicable (&ldquo;N/A&rdquo;) for periods prior to January 1, 2015.</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: center; text-indent: -0.25in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-indent: -0.25in"><B>Non-GAAP Financial Measure Reconciliation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-indent: -0.25in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">A financial measure included in our selected
historical consolidated financial data and elsewhere in this prospectus is not a measure of financial performance recognized by
GAAP. This non-GAAP financial measure is the &ldquo;efficiency ratio.&rdquo; Our management uses this non-GAAP financial measures
in its analysis of our performance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The efficiency ratio is a non-GAAP measure of
expense control relative to adjusted revenue. We calculate the efficiency ratio by dividing total noninterest expenses, as determined
under GAAP, by the sum of total net interest income and total noninterest income, each as determined under GAAP, but excluding
net gains on securities and other non-recurring income sources, if applicable, from this calculation, which we refer to below as
adjusted revenue. We believe that this provides one a reasonable measure of core expenses relative to core revenue.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We believe that this non-GAAP financial measure
provides information that is important to investors and that is useful in understanding our financial position, results and ratios.
However, this non-GAAP financial measure is supplemental and is not a substitute for an analysis based on GAAP measures. As other
companies may use different calculations for this measure, this presentation may not be comparable to other similarly titled measures
by other companies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">At
    March 31,</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="10" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">At
    December 31,</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2017</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2015</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2014</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="18" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars in thousands)</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Efficiency Ratio:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 35%; text-align: left">Net interest income</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">4,295</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">3,632</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">15,657</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">11,994</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">10,247</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Noninterest income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,204</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">987</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,125</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,943</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,766</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Less: Net gains on sales of securities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">151</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Adjusted revenue</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">5,499</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">4,613</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">19,776</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">14,937</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">11,862</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Total noninterest expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,024</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,420</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14,599</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,171</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,262</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Efficiency ratio</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">73.18</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">74.14</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">73.82</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">81.48</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">94.94</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: center; text-indent: -0.25in"><B>&nbsp;</B></P>


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><A NAME="a_009"></A>MANAGEMENT&rsquo;S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="background-color: white"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="background-color: white"><I>The
following discussion and analysis of our financial condition and results of operations for the three months ended March 31, 2017
and 2016 and for the years ended December 31, 2016, 2015 and 2014 should be read in conjunction with &ldquo;Selected Historical
Consolidated Financial Data&rdquo; and our consolidated financial statements and the accompanying notes included elsewhere in
this prospectus. This discussion and analysis contains forward-looking statements that are subject to certain risks and uncertainties
and are based on certain assumptions that we believe are reasonable but may prove to be inaccurate. Certain risks, uncertainties
and other factors, including those set forth under &ldquo;Cautionary Note Regarding Forward-Looking Statements,&rdquo; &ldquo;Risk
Factors&rdquo; and elsewhere in this prospectus, may cause actual results to differ materially from those projected results discussed
in the forward-looking statements appearing in this discussion and analysis. We assume no obligation to update any of these forward-looking
statements.</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="background-color: white"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Overview </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our profitability is highly dependent on our
net interest income, which is the difference between our interest income on interest earning assets, such as loans and securities,
and our interest expense on interest bearing liabilities, such as deposits and borrowed funds. Additionally, we also obtain a significant
portion of noninterest income through our merchant services business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our net income increased $172,000, or 26.8%,
to $815,000 for the three months ended March 31, 2017 from $643,000 for the three months ended March 31, 2016. The increase was
due to an increase in net interest income and customer related fees and service charges. The increase in net interest income was
caused by an increase in interest and fees on loans, which increased $602,000, or 18.7%, to $3.8 million for the three months ended
March 31, 2017 from $3.2 million for the three months ended March 31, 2016. This increase was due to continued growth in our loan
portfolio.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Noninterest income increased $217,000, or 22.0%,
to $1.2 million for the three months ended March 31, 2017 from $987,000 for the three months ended March 31, 2016. The increase
in noninterest income was primarily from growth in customer related fees and service charges. Customer related fees and service
charges increased $138,000 or 60.5% to $366,000 for the three months ended March 31, 2017 from $228,000 for the three months ended
March 31, 2016. Merchant processing income increased by $85,000 or 11.3% to $838,000 for the three months ended March 31, 2017
from $753,000 for the three months ended March 31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our provision for loan losses was $150,000 for
the three months ended March 31, 2017 compared to $145,000 for the three months ended March 31, 2016. The higher provision for
loan loss was a result of the continued growth in our loan portfolio.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our net income increased $1.7 million, or 140.8%,
to $2.8 million for the year ended December 31, 2016 from $1.2 million for the year ended December 31, 2015. The increase was due
to an increase in net interest income and merchant processing income. The increase in net interest income was caused by an increase
in interest and fees on loans, which increased $3.5 million, or 32.8%, to $14.1 million for the year ended December 31, 2016 from
$10.6 million for the year ended December 31, 2015. This increase was due to continued success in growing our loans.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Noninterest income increased $1.2 million, or
40.2%, to $4.1 million for the year ended December 31, 2016 from $2.9 million for the year ended December 31, 2015. The increase
in noninterest income was primarily from growth in our merchant services business. Merchant processing income increased by $737,000
or 33.5% to $2.9 million for the year ended December 31, 2016 from $2.2 million for the year ended December 31, 2015. Customer
related fees and service charges also increased $439,000 or 59.2% to $1.2 million for the year ended December 31, 2016 from $741,000
for the year ended December 31, 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our provision for loan losses was $595,000 for
the year ended December 31, 2016 compared to $930,000 for the year ended December 31, 2015. The provision recorded resulted in
an allowance for loan losses of $3.4 million, or 1.23% of total loans at December 31, 2016, compared to $2.8 million, or 1.25%
of total loans at December 31, 2015. The decrease in the allowance for loan losses as a percentage of loans resulted primarily
from changes in our loan portfolio composition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our net income increased $1.1 million to
$1.2 million for the year ended December 31, 2015 from $41,000 for the year ended December 31, 2014. The increase was due to an
increase in net interest income and merchant processing income, partially offset by a decrease in gain on sales of securities
and an increase in the provision for loan losses. The increase in net interest income was caused by an increase in interest and
fees on loans, which increased $1.7 million, or 19.2%, to $10.6 million for the year ended December 31, 2015 from $8.9 million
for the year ended December 31, 2014. This increase was due to our continued success in growing 1-4 family residential, multifamily,
commercial real estate loans, construction, commercial loans and consumer loans.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Noninterest income increased $1.2 million,
or 66.7%, to $2.9 million for the year ended December 31, 2015 from $1.8 million for the year ended December 31, 2014. The increase
in noninterest income was primarily from growth in our merchant services business. Merchant processing income increased by $1.1
million or 92.7% to $2.2 million for the year ended December 31, 2015 from $1.1 million for the year ended December 31, 2014.
Gains on sales of securities decreased $151,000 for the year ended December 31, 2015 from the year ended December 31, 2014. We
did not sell any securities during the year ended December 31, 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our provision for loan losses was $930,000
for the year ended December 31, 2015 compared to $300,000 for the year ended December 31, 2014. The higher provision for loan
loss was a result of the growth in the loan portfolio and related impact to the allowance for loan losses.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Critical Accounting Policies </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">A summary of our accounting policies is described
in Note 1 to both the consolidated financial statements and the interim condensed consolidated financial statements
included in this prospectus. Critical accounting estimates are necessary in the application of certain accounting policies
and procedures and are particularly susceptible to significant change. Critical accounting policies are defined as those involving
significant judgments and assumptions by management that could have a material impact on the carrying value of certain assets
or on income under different assumptions or conditions. Management believes that the most critical accounting policies, which
involve the most complex or subjective decisions or assessments, are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Allowance for Loan Losses.</I></B> The
allowance for loan losses is a valuation allowance for probable incurred credit losses. The allowance for loan losses is increased
by provisions for loan losses charged to income. Losses are charged to the allowance when all or a portion of a loan is deemed
to be uncollectible. Subsequent recoveries of loans previously charged off are credited to the allowance for loan losses when realized.
Management estimates the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information
about specific borrower situations and estimated collateral values, economic conditions and other factors. Allocations of the allowance
may be made for specific loans, but the entire allowance is available for any loan that, in management&rsquo;s judgment, should
be charged off.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The allowance consists of specific and general
components. The specific component relates to loans that are individually classified as impaired when, based on current information
and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement.
Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties,
are considered troubled debt restructurings and classified as impaired.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Factors considered by management in determining
impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments
when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management
determines the significance of payment delays and payment shortfalls on case-by-case basis, taking into consideration all of the
circumstances surrounding the loan and the borrower, including the length of the delay, the reason for the delay, the borrower&rsquo;s
prior payment record, and the amount of the shortfall in relation to the principal and interest owed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">All loans, except for consumer loans, are individually
evaluated for impairment. If a loan is impaired, a portion of the allowance is allocated as a specific allowance. The measurement
of an impaired loan is based on (i) the present value of expected future cash flows discounted at the loan&rsquo;s effective interest
rate, (ii) the loan&rsquo;s observable market price or (iii) the fair value of the collateral if the loan is collateral dependent.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Troubled debt restructurings are separately
identified for impairment disclosures and are measured at the present value of estimated future cash flows using the loan&rsquo;s
effective rate at inception. If a trouble debt restructuring is considered to be a collateral dependent loan, the loan is reported,
net, at the fair value of the collateral. For troubled debt restructurings that subsequently default, we determine the amount of
reserve in accordance with the accounting policy for the allowance for loan losses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The general component is based on historical
loss experience adjusted for current factors. The historical loss experience is determined by portfolio segment and is based on
the actual loss history experienced by the company. This actual loss experience is supplemented with other economic factors based
on the risks present for each portfolio segment. These economic factors include consideration of the following: levels of and trends
in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects
of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience,
ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry
conditions; and effects of changes in credit concentrations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We have identified the following loan segments:
Commercial Real Estate, Multifamily, Construction, Commercial, 1-4 Family Residential and Consumer. The risks associated with a
concentration in real estate loans include potential losses from fluctuating values of land and improved properties. Commercial
Real Estate and Multifamily loans are expected to be repaid from the cash flow of the underlying property so the collective amount
of rents must be sufficient to cover all operating expenses, property management and maintenance, taxes and debt service. Increases
in vacancy rates, interest rates or other changes in general economic conditions can all have an impact on the borrower and their
ability to repay the loan. Construction loans are considered riskier than commercial financing on improved and established commercial
real estate. The risk of potential loss increases if the original cost estimates or time to complete are significantly off. The
remainder of the loan portfolio is comprised of commercial and consumer loans. The primary risks associated with the commercial
loans are the cash flow of the business, the experience and quality of the borrowers&rsquo; management, the business climate, and
the impact of economic factors. The primary risks associated with residential real estate and consumer loans relate to the borrower,
such as the risk of a borrower&rsquo;s unemployment as a result of deteriorating economic conditions or the amount and nature of
a borrower&rsquo;s other existing indebtedness, and the value of the collateral securing the loan if the bank must take possession
of the collateral.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Although management uses available information
to recognize losses on loans, because of uncertainties associated with local economic conditions, collateral values and future
cash flows on impaired loans, it is reasonably possible that a material change could occur in the allowance for loan losses in
the near term. However, the amount of the change that is reasonably possible cannot be estimated. The evaluation of the adequacy
of loan collateral is often based upon estimates and appraisals. Because of changing economic conditions, the valuations determined
from such estimates and appraisals may also change. Accordingly, we may ultimately incur losses that vary from management&rsquo;s
current estimates. Adjustments to the allowance for loan losses will be reported in the period such adjustments become known or
can be reasonably estimated. All loan losses are charged to the allowance for loan losses when the loss actually occurs or when&nbsp;the
collectability of the principal is unlikely. Recoveries are credited to the allowance at the time of recovery.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Income Taxes.</I></B> Income taxes are
provided for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates
is recognized in income in the period the change occurs. Deferred tax assets are reduced, through a valuation allowance, if necessary,
by the amount of such benefits that are not expected to be realized based on current available evidence.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">A tax position is recognized as a benefit only
if it is &ldquo;more likely than not&rdquo; that the tax position would be sustained in a tax examination, with a tax examination
being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized
on examination. For tax positions not meeting the &ldquo;more likely than not&rdquo; test, no tax benefit is recorded. The Company
recognizes interest and/or penalties related to income tax matters in income tax expense.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Emerging Growth Company. </I></B>Pursuant
to the JOBS Act, an emerging growth company is provided the option to adopt new or revised accounting standards that may be issued
by the Financial Accounting Standards Board (&ldquo;FASB&rdquo;) or the SEC either (i)&nbsp;within the same periods as those otherwise
applicable to non-emerging growth companies or (ii)&nbsp;within the same time periods as private companies. We have irrevocably
elected to adopt new accounting standards within the public company adoption period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Although we are still evaluating the JOBS Act,
we may take advantage of some of the reduced regulatory and reporting requirements that are available to it so long as we qualify
as an emerging growth company, including, but not limited to, not being required to comply with the auditor attestation requirements
of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation, and exemptions from
the requirements of holding non-binding advisory votes on executive compensation and golden parachute payments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Discussion and Analysis of Financial Condition </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Assets</I>. </B>Our total assets were
$438.1 million at March 31, 2017, an increase of $13.2 million from $424.8 million at December 31, 2016. The increase was primarily
due to an increase in net loans of $11.9 million, or 4.3%, and an increase in securities available-for-sale of $11.0 million, or
11.9%, partially offset by a decrease in cash and cash equivalents of $10.4 million, or 24.2%.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our total assets were $424.8 million at December
31, 2016, an increase of $72.2 million from $352.7 million at December 31, 2015. The increase was primarily due to an increase
in net loans of $53.4 million, or 24.1%, and an increase in cash and cash equivalents of $9.8 million.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our total assets increased $22.0 million,
or 6.6%, to $352.7 million at December 31, 2015 from $330.7 million at December 31, 2014. The increase resulted primarily from
an increase in net loans and securities, partially offset by decreases in cash and cash equivalents.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Cash and Cash Equivalents. </I></B>Cash
and cash equivalents decreased $10.4 million, or 24.2%, to $32.6 million at March 31, 2017 from $43.0 million at December 31, 2016.
The decrease in cash and cash equivalents resulted from our using excess liquidity at December 31, 2016 to fund loan growth and
investments in securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Cash and cash equivalents increased $9.8 million,
or 29.7%, to $43.0 million at December 31, 2016 from $33.1 million at December 31, 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I></I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Cash and cash equivalents decreased $38.8
million, or 53.9%, to $33.1 million at December 31, 2015 from $71.9 million at December 31, 2014. The decrease in cash and cash
equivalents resulted from our using excess liquidity at December 31, 2014 to fund loan growth and investments in securities.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Loan Portfolio Analysis. </I></B>At March
31, 2017, net loans were $287.0 million, or 65.5% of total assets, compared to $275.2 million, or 64.8% of total assets, at December
31, 2016. Commercial loans increased $6.8 million, or 6.4%, to $112.8 million at March 31, 2017 from $106.1 million at December
31, 2016. Multifamily loans increased $9.3 million, or 11.2%, to $92.8 million at March 31, 2017 from $83.4 million at December
31, 2016. Consumer loans increased $466,000, or 4.4%, to $11.0 million at March 31, 2017 from $10.6 million at December 31, 2016.
1-4 family residential loans decreased $2.0 million, or 4.1%, to $47.6 million at March 31, 2017 from $49.6 million at December
31, 2016. Construction loans also decreased by $1.6 million, or 27.7%, to $4.1 million at March 31, 2017 from $5.6 million at December
31, 2016. Commercial real estate loans decreased by $921,000, or 4.1%, to $21.3 million at March 31, 2017 from $22.2 million at
December 31, 2016. We have experienced continued success in growing our loan portfolio, as described in &ldquo;Business&mdash;Business
Strategy.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">At December 31, 2016, net loans were $275.2
million, or 64.8% of total assets, compared to $221.7 million, or 62.9% of total assets, at December 31, 2015. Commercial loans
increased $22.5 million, or 26.9%, to $106.1 million at December 31, 2016 from $83.6 million at December 31, 2015. Multifamily
loans increased $12.2 million, or 17.2%, to $83.4 million at December 31, 2016 from $71.2 million at December 31, 2015. Consumer
loans decreased $3.0 million or 22.0%, to $10.6 million at December 31, 2016 from $13.6 million at December 31, 2015. 1-4 family
residential loans increased $21.1 million, or 73.8%, to $49.6 million at December 31, 2016 from $28.5 million at December 31, 2015.
Construction loans also increased by $313,000, or 5.9%, to $5.6 million at December 31, 2016 from $5.3 million at December 31,
2015. Commercial real estate loans increased by $926,000, or 4.4%, to $22.2 million at December 31, 2016 from $21.3 million at
December 31, 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">At December 31, 2015, net loans were $221.7
million, or 62.9% of total assets, compared to $170.5 million, or 51.6% of total assets at December 31, 2014. Commercial loans
increased $17.9 million, or 27.3%, to $83.6 million at December 31, 2015 from $65.6 million at December 31, 2014. Multifamily
loans increased $12.6 million or 21.5% to $71.2 million at December 31, 2015 from $58.6 million at December 31, 2014. Commercial
real estate loans increased $7.5 million, or 54.4%, to $21.3 million at December 31, 2015 from $13.8 million at December 31, 2014.
1-4 family residential loans increased $5.5 million or 23.7% to $28.5 million at December 31, 2015 from $23.1 million at December
31, 2014. Construction loans also increased by $4.2 million to $5.3 million at December 31, 2015 from $1.1 million at December
31, 2014. Consumer loans increased by $4.0 million or 41.9% to $13.6 million at December 31, 2015 from $9.6 million at December
31, 2014.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Loan Portfolio Composition.</I></B>&nbsp;The
following table sets forth the composition of our loan portfolio by type of loan at the dates indicated.</P>

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<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">At
    March 31,</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="14" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>At December 31,</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2017</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2015</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amount</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amount</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amount</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="22" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars in thousands)</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Real estate:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 22%; text-align: left; text-indent: -0.1in; padding-left: 16.2pt">1-4 family residential</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">47,556</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">16.43</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">49,597</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">17.88</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">28,531</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">12.77</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt">Multifamily</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">92,755</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">32.04</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">83,410</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30.06</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">71,184</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31.86</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Commercial real estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21,277</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7.35</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22,198</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8.00</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21,272</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.52</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt; text-indent: -0.1in; padding-left: 16.2pt">Construction</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,054</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1.40</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,610</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2.02</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,297</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2.38</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Total real estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">165,642</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">57.22</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">160,815</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">57.96</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">126,284</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">56.53</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Commercial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">112,818</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38.97</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">106,064</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38.23</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">83,563</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">37.40</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Consumer</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">11,037</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3.81</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10,571</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3.81</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">13,556</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6.07</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 34.2pt">Total Loans</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">289,497</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100.00</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">277,450</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100.00</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">223,403</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100.00</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Allowance for loan losses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,523</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,413</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,799</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Deferred loan costs, net</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,059</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,128</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,116</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Loans, net</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">287,033</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">275,165</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">221,720</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="22" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">At
    December 31,</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2014</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2013</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2012</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amount</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amount</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amount</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="22" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars in thousands)</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Real estate:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 22%; text-align: left; text-indent: -0.1in; padding-left: 16.2pt">1-4 family residential</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">23,072</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">13.44</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">13,757</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">9.22</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">10,879</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">8.45</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt">Multifamily</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">58,578</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">34.11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">54,702</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">36.66</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">46,082</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">35.79</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Commercial real estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,776</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8.02</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,016</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5.37</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,304</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6.45</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt; text-indent: -0.1in; padding-left: 16.2pt">Construction</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,105</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.65</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6,693</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4.49</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,886</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3.80</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Total real estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">96,531</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">56.22</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">83,168</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">55.74</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">70,151</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">54.49</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Commercial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">65,643</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38.22</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">60,833</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">40.77</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">53,928</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">41.88</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Consumer</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9,556</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5.56</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,208</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3.49</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,679</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3.63</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 34.2pt">Total Loans</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">171,730</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100.00</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">149,209</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100.00</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">128,758</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100.00</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Allowance for loan losses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,165</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,865</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,855</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Deferred loan costs, net</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">947</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(27</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(501</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Loans, net</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">170,512</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">147,317</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">126,402</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Loan Maturity. </I></B>The following table
sets forth certain information at December 31, 2016 regarding the contractual maturity of our loan portfolio. Demand loans, loans
having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less. The table does
not include any estimate of prepayments that could significantly shorten the average life of all loans and may cause our actual
repayment experience to differ from that shown below.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">December&nbsp;31,&nbsp;2016</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">1-4&nbsp;Family<BR>
    Residential</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Multifamily</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Commercial<BR>
    Real&nbsp;Estate</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Construction</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Commercial</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Consumer</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Total</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 10pt">Amounts due in:</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="26" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(In thousands)</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 10%; text-align: left; padding-left: 0.25in; text-indent: -0.125in">One year or less</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">8,725</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">21,578</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">1,580</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">92,288</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">8,921</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">133,092</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in; text-indent: -0.125in">More than one to five years</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,478</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38,782</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,920</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,030</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,776</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,302</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">102,288</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.25in; text-indent: -0.125in">More than five to ten years</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,456</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,701</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,338</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">348</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">26,843</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.25in; text-indent: -0.125in">More than ten years</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,938</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9,349</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,940</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">15,227</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; padding-left: 0.125in">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">49,597</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">83,410</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">22,198</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5,610</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">106,064</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">10,571</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">277,450</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


<!-- Field: Page; Sequence: 51 -->
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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following table sets forth fixed and adjustable-rate
loans at December 31, 2016 that are contractually due after December 31, 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="10" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Due
    After December 31, 2017</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Fixed</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Adjustable</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Total</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 10pt">Real estate</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="10" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(In thousands)</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 61%; text-align: left; padding-left: 9pt">1-4 family residential</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">40,586</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">286</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">40,872</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Multifamily</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">53,702</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,130</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">61,832</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Commercial real estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18,437</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,762</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22,199</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,030</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,030</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>Commercial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">988</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,788</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,776</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Consumer</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,649</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,649</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">119,392</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">24,966</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">144,358</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">At March 31, 2017, $42.3 million, or 26.2% of
our adjustable interest rate loans were at their interest rate floor.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Delinquent Loans. </I></B>The following
tables set forth our loan delinquencies, including non-accrual loans, by type and amount at the dates indicated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="10" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">At
    March 31, 2017</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="10" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">At
    December 31, 2016</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="10" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">At
    December 31, 2015</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">30-59<BR>

    Days <BR>
Past <BR>
Due</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">60-89<BR>

    Days <BR>
Past <BR>
Due</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">90
    Days <BR>
or More<BR>
 Past Due</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">30-59<BR>

    Days<BR>
 Past<BR>
 Due</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">60-89
    <BR>
Days <BR>
Past <BR>
Due</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">90
    Days <BR>
or More<BR>
 Past Due</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">30-59<BR>

    Days<BR>
 Past <BR>
Due</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">60-89
    <BR>
Days <BR>
Past <BR>
Due</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">90
    Days <BR>
or More<BR>
 Past Due</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="34" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars in thousands)</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">1-4 family residential</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">&#8213;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">&#8213;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">&#8213;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">203</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">&#8213;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">&#8213;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">&#8213;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">&#8213;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">&#8213;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Multifamily</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Commercial real estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>Commercial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">284</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Consumer</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; padding-left: 9pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">284</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"> &#8213;</P></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#8213;</P></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">203</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#8213;</P></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#8213;</P></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#8213;</P></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#8213;</P></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#8213;</P></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="10" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">At
    December 31, 2014</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="10" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">At
    December 31, 2013</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="10" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">At
    December 31, 2012</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">30-59<BR>

    Days <BR>
Past<BR>
 Due</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">60-89
    <BR>
Days <BR>
Past<BR>
 Due</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">90
    Days<BR>
 or More <BR>
Past Due</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">30-59
    <BR>
Days<BR>
 Past<BR>
 Due</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">60-89
    <BR>
Days <BR>
Past<BR>
 Due</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">90
    Days <BR> or More <BR> Past Due</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">30-59
    <BR>
Days <BR>
Past <BR>
Due</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">60-89
    <BR>
Days <BR>
Past <BR>
Due</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">90
    Days <BR>
or More <BR>
Past Due</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="34" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars in thousands)</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">1-4 family residential</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">&mdash;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">&mdash;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">&mdash;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">&mdash;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">&mdash;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">&mdash;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">&mdash;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">&mdash;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">&mdash;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Multifamily</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">843</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">336</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">264</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Commercial real estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">685</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">634</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>Commercial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,100</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Consumer</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#9;&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; padding-left: 9pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"> &#8213;</P></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,100</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#8213;</P></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#8213;</P></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,528</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">634</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">336</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"> &#8213;</P></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">264</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in"><B>Non-performing Assets.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Non-performing assets include loans that are
90 or more days past due or on non-accrual status, including troubled debt restructurings on non-accrual status, and real estate
and other loan collateral acquired through foreclosure and repossession. Troubled debt restructurings include loans for economic
or legal reasons related to the borrower&rsquo;s financial difficulties, for which we grant a concession to the borrower that we
would not consider otherwise. Loans 90 days or greater past due may remain on an accrual basis if adequately collateralized and
in the process of collection. At March 31, 2017 and December 31, 2016, we did not have any accruing loans past due 90 days or greater
or troubled debt restructurings. For non-accrual loans, interest previously accrued but not collected is reversed and charged against
income at the time a loan is placed on non-accrual status. Loans are returned to accrual status when all the principal and interest
amounts contractually due are brought current and future payments are reasonably assured.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Real estate that we acquire as a result of foreclosure
or by deed-in-lieu of foreclosure is classified as foreclosed real estate until it is sold. When property is acquired, it is initially
recorded at the fair value less costs to sell at the date of foreclosure, establishing a new cost basis. Holding costs and declines
in fair value after acquisition of the property result in charges against income. We have not had any foreclosed assets for the
periods presented.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following table sets forth information regarding
our non-performing assets at the dates indicated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">At
    March 31,</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="18" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">At
    December 31,</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2017</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2015</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2014</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2013</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2012</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="22" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars in thousands)</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Non-accrual loans:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">1- 4 family residential</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 22%; text-indent: -0.1in; padding-left: 0.1in">Multifamily</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">264</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Commercial real estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">634</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Commercial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Consumer</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 2.7pt">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 2.7pt">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 2.7pt">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 2.7pt">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 2.7pt">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 2.7pt">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Total non-accrual loans</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#9;&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#9;&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#9;&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">634</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">264</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Other real estate owned</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Loans past due 90 days and still accruing</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Troubled debt restructurings</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 2.7pt">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 2.7pt">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 2.7pt">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 2.7pt">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 2.7pt">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 2.7pt">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Total nonperforming assets</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#9;&#8213;</P></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#9;&#8213;</P></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#9;&#8213;</P></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#9;&#8213;</P></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">634</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">264</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Total loans<SUP> (1)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">290,556</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">278,578</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">224,519</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">172,677</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">149,182</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">128,257</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Total assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">438,059</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">424,833</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">352,650</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">330,690</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">237,580</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">222,181</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Total non-accrual loans to total loans</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.42</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.21</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Total non-performing assets to total assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.27</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.12</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-indent: -0.25in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-indent: -0.25in"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(1)</TD><TD>Loans are presented before the allowance for loan losses but include deferred fees/costs.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in"><B>Allowance for Loan Losses. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Please see &ldquo;&ndash;Critical Accounting
Policies &ndash; Allowance for Loan Losses&rdquo; for additional discussion of our allowance policy.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The allowance for loan losses is maintained
at levels considered adequate by management to provide for probable loan losses inherent in the loan portfolio as of the consolidated
balance sheet reporting dates. The allowance for loan losses is based on management&rsquo;s assessment of various factors affecting
the loan portfolio, including portfolio composition, delinquent and non-accrual loans, national and local business conditions and
loss experience and an overall evaluation of the quality of the underlying collateral.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following table sets forth activity in our
allowance for loan losses for the periods indicated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">For
    the three months<BR> ended March 31,</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="18" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">For
    the years ended December 31,</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2017</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2015</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2014</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2013</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2012</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="26" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars in thousands)</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 10%; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Allowance at beginning of year</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">3,413</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">2,799</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">2,799</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">2,165</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">1,865</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">1,855</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">670</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Provision for loan losses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">150</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">145</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">595</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">930</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">300</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">60</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,255</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Charge-offs:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">1-4 family residential</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.35in">Multifamily</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">39</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">70</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Commercial real estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.35in">Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.35in">Commercial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">296</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.35in">Consumer</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">40</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">7</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.35in">Total charge-offs</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">40</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">7</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">296</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">51</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">70</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Recoveries:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">1-4 family residential</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.35in">Multifamily</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Commercial real estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.35in">Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.35in">Commercial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">26</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.35in">Consumer</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.35in">Total recoveries</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">25</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">26</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right">&#8213;</P></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Allowance at end of year</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,523</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,969</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,413</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,799</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,165</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,865</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,855</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Nonperforming loans at end of period</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">634</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">264</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Total loans outstanding at end of period<SUP>(1)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">290,556</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">236,263</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">278,578</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">224,519</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">172,677</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">149,182</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">128,257</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Average loans outstanding during the period<SUP>(1)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">278,188</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">228,007</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">248,068</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">187,317</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">147,330</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">134,748</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">109,875</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Allowance for loan losses to non-performing loans</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">N/A</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">N/A</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">N/A</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">N/A</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">N/A</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">294.16</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">702.65</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Allowance for loan losses to total loans at end of the period<SUP>(1)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.21</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.26</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.23</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.25</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.25</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.25</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.45</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Net charge-offs to average loans outstanding during the period</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.01</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.01</TD><TD STYLE="text-align: left">)%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.01</TD><TD STYLE="text-align: left">)%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.16</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.00</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.04</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">0. 06</FONT></TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-indent: -0.25in">&nbsp;</P>

<!-- Field: Rule-Page --><DIV ALIGN="CENTER" STYLE="margin-top: 3pt; margin-bottom: 3pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 25%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(1)</TD><TD>Loans are presented before the allowance for loan losses but include deferred fees/costs.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


<!-- Field: Page; Sequence: 54 -->
    <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->50<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;<A HREF="#TableOfContents">Table of Contents</A></TD><TD STYLE="width: 34%">&nbsp;</TD><TD STYLE="width: 33%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Allocation of Allowance for Loan Losses.
</I></B>The following tables set forth the allowance for loan losses allocated by loan category. The allowance for loan losses
allocated to each category is not necessarily indicative of future losses in any particular category and does not restrict the
use of the allowance to absorb losses in other categories.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">At&nbsp;March&nbsp;31,</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="14" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">At&nbsp;December&nbsp;31,</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2017</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2015</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Allowance<BR> for&nbsp;Loan<BR>
    Losses</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent&nbsp;of<BR> Loans&nbsp;in<BR>
&nbsp;Each<BR>
    Category&nbsp;to<BR> Total&nbsp;Loans</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Allowance<BR> for&nbsp;Loan<BR>
    Losses</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent&nbsp;of<BR> Loans&nbsp;in<BR>
    Each<BR> Category<BR>
&nbsp;to Total<BR>
&nbsp;Loans</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Allowance<BR> for&nbsp;Loan<BR>
    Losses</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent&nbsp;of<BR>
    Loans&nbsp;in<BR>     Each<BR> Category<BR> &nbsp;to Total<BR>
&nbsp;Loans</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="22" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars in thousands)</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 22%; text-align: left">1-4 family residential</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">350</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">16.43</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">360</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">17.88</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">213</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">12.77</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Multifamily</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">669</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">32.04</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">621</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30.06</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">533</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31.86</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Commercial real estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">227</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7.35</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">238</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8.00</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">230</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.52</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">102</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.40</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">141</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.02</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">134</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.38</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>Commercial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,039</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38.97</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,934</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38.23</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,536</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">37.40</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Consumer</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">136</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3.81</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">119</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3.81</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">153</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6.07</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 9pt">Total allocated allowance</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,523</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100.00</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,413</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100.00</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,799</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100.00</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="22" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">At&nbsp;December&nbsp;31,</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2014</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2013</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2012</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Allowance<BR> for&nbsp;Loan<BR>
    Losses</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent&nbsp;of<BR> Loans&nbsp;in<BR>
    Each<BR> Category&nbsp;to<BR> Total<BR> Loans</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Allowance<BR> for&nbsp;Loan<BR>
    Losses</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent&nbsp;of<BR> Loans&nbsp;in<BR>
    Each<BR> Category<BR> to&nbsp;Total<BR> Loans</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Allowance<BR> for&nbsp;Loan<BR>
    Losses</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent&nbsp;of<BR> Loans&nbsp;in<BR>
    Each<BR> Category<BR> to&nbsp;Total<BR> Loans</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="22" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars in thousands)</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 22%; text-align: left">1-4 family residential</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">162</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">13.44</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">60</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">9.22</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">61</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">8.45</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Multifamily</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">528</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">34.11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">536</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">36.66</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">549</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">35.79</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Commercial real estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">97</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8.02</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">115</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5.37</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">119</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6.45</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">27</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.65</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">98</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.49</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">115</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.80</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>Commercial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,222</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38.22</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">960</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">40.77</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">946</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">41.88</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Consumer</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">129</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5.56</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">96</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3.49</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">65</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3.63</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 9pt">Total allocated allowance</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,165</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100.00</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,865</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100.00</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,855</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100.00</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The allowance for loan losses as a percentage
of loans was 1.21%, 1.23% and 1.25% as of March 31, 2017, December 31, 2016 and 2015, respectively. The decrease in the allowance
percentage from December 31, 2016 to March 31, 2017 was primarily due to changes in the composition of the loan portfolio.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The allowance consists of general and allocated
components. The general component relates to pools of non-impaired loans and is based on historical loss experience adjusted for
qualitative factors. The allocated component relates to loans that are classified as impaired, whereby an allowance is established
when the discounted cash flows, collateral value or observable market price of the impaired loan is lower than the carrying value
of that loan.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">A loan is considered impaired when, based on
current information and events, it is probable that we will be unable to collect the scheduled payments of principal or interest
when due according to the contractual terms of the loan agreement. Factors considered by us in determining impairment include payment
status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience
insignificant payment delays and payment shortfalls generally are not classified as impaired. We determine the significance of
payment delays and payment shortfalls on case-by-case basis, taking into consideration all of the circumstances surrounding the
loan and the borrower, including the length of the delay, the reasons for the delay, the borrower&rsquo;s prior payment record,
and the amount of the shortfall in relation to the principal and interest owed. The measurement of an impaired loan is based on
(i)&nbsp;the present value of expected future cash flows discounted at the loan&rsquo;s effective interest rate, (ii)&nbsp;the
loan&rsquo;s observable market price or (iii)&nbsp;the fair value of the collateral if the loan is collateral dependent.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We had no impaired loans at March 31, 2017,
December 31, 2016, December 31, 2015 and December 31, 2014.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">All loans except for consumer loans are individually
evaluated for impairment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Troubled debt restructurings are separately
identified for impairment disclosures and are measured at the present value of estimated future cash flows using the loan&rsquo;s
effective rate at inception. If a troubled debt restructuring is considered to be a collateral dependent loan, the loan is reported,
net, at the fair value of the collateral. For troubled debt restructurings that subsequently default, we determine the amount of
reserve in accordance with the accounting policy for the allowance for loan losses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Interest income on mortgage and commercial loans
is discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. Consumer
loans are typically charged off no later than 120 days past due. Past due status is based on the contractual terms of the loan.
In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered
doubtful. Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are
collectively evaluated for impairment and individually classified impaired loans. A loan is moved to non-accrual status in accordance
with our loan policy, typically after 90 days of non-payment.<FONT STYLE="color: #0070C0"> </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">All interest accrued but not received for loans
placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or
cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest
amounts contractually due are brought current and future payments are reasonably assured.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Although we believe that we use the best information
available to establish the allowance for loan losses, future adjustments to the allowance for loan losses may be necessary and
our results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making
the determinations. Furthermore, while we believe we have established our allowance for loan losses in conformity with generally
accepted accounting principles in the United States of America, there can be no assurance that regulators, in reviewing our loan
portfolio, will not require us to increase our allowance for loan losses. In addition, because future events affecting borrowers
and collateral cannot be predicted with certainty, there can be no assurance that the existing allowance for loan losses is adequate
or that increases will not be necessary should the quality of any loans deteriorate as a result of the factors discussed above.
Any material increase in the allowance for loan losses may adversely affect our financial condition and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Securities Portfolio </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following table sets forth the amortized
cost and estimated fair value of our available-for-sale securities portfolio at the dates indicated. Our securities portfolio has
decreased in recent years as we have used excess cash to fund our loan growth instead of re-investing the proceeds in investment
securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-size: 1pt; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" STYLE="font-size: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="22" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">At&nbsp;December&nbsp;31,</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">At&nbsp;March&nbsp;31,&nbsp;2017</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2015</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2014</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amortized<BR>
    Cost</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Fair<BR>
    Value</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amortized<BR>
    Cost</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Fair<BR>
    Value</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amortized<BR>
    Cost</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Fair<BR>
    Value</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amortized<BR>
Cost</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Fair<BR>
    Value</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="22" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(In thousands)</FONT></TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Government agency debentures</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">&mdash;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">&mdash;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">&mdash;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">&mdash;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">4,064</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">4,001</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">4,074</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">3,980</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Mortgage backed securities-agency</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,842</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,417</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,417</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,012</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17,445</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17,147</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17,884</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17,709</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Collateralized mortgage obligations-agency</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">89,076</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">88,235</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">77,677</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">76,633</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">63,447</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">63,091</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">49,380</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">49,236</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">104,918</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">103,652</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">94,094</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">92,645</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">84,956</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">84,239</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">71,338</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">70,925</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">At March 31, 2017 and December 31, 2016, we
had no investments in a single company or entity, other than government and government agency securities, which had an aggregate
book value in excess of 10% of our equity.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We review the investment portfolio on a quarterly
basis to determine the cause, magnitude and duration of declines in the fair value of each security. In estimating other-than-temporary
impairment (OTTI), we consider many factors including: (1)&nbsp;the length of time and extent that fair value has been less than
cost, (2)&nbsp;the financial condition</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">and near term prospects of the issuer, (3)&nbsp;whether the market
decline was affected by macroeconomic conditions, and (4)&nbsp;whether we have the intent to sell the security or more likely than
not will be required to sell the security before its anticipated recovery. If either of the criteria regarding intent or requirement
to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt
securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: (1)&nbsp;OTTI
related to credit loss, which must be recognized in the income statement and (2)&nbsp;OTTI related to other factors, which is recognized
in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected
to be collected and the amortized cost basis. The assessment of whether any other than temporary decline exists may involve a high
degree of subjectivity and judgment and is based on the information available to management at a point in time. We evaluate securities
for OTTI at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">At March 31, 2017 and December&nbsp;31, 2016,
securities in unrealized loss positions were issuances from government sponsored entities. Due to the decline in fair value attributable
to changes in interest rates and illiquidity, not credit quality and because we do not have the intent to sell the securities and
it is likely that it will not be required to sell the securities before their anticipated recovery, we do not consider the securities
to be other-than-temporarily impaired at March 31, 2017 and December&nbsp;31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">No impairment charges were recorded for the
three months ended March 31, 2017 and 2016 or for the years ended December 31, 2016, 2015 and 2014.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Portfolio Maturities and Yields. </I></B>The
composition and maturities of the investment securities portfolio at March 31, 2017, are summarized in the following table. No
tax-equivalent yield adjustments have been made, as the amount of tax free interest earning assets is immaterial.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="38" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">At
    March 31, 2017</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">One
    Year or Less</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">More
    Than One Year<BR>
    through Five Years</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">More
    Than Five Years<BR>
    Through Ten Years</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">More
    Than Ten Years</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Total</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Book<BR>
    Value</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Weighted<BR>
    Average<BR> Yield</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Book<BR>
    Value</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Weighted<BR>
    Average<BR> Yield</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Book<BR>
    Value</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Weighted<BR>
    Average<BR> Yield</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Book<BR>
    Value</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Weighted<BR>
    Average<BR> Yield</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Book<BR>
    Value</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Weighted<BR>
    Average<BR> Yield</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="38" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars in thousands)</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Mortgage backed securities-agency</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">&mdash;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&mdash;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">&mdash;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&mdash;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">&mdash;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&mdash;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">15,842</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">2.10</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">15,842</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">2.10</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Collateralized mortgage obligations-agency</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,545</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2.22</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">84,531</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2.14</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">89,076</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2.15</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total securities available for sale</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; text-underline-style: double"><U></U></FONT><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><U></U></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4,545</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2.22</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100,373</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2.14</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">104,918</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2.14</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Deposits </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Total deposits increased $12.6 million, or 3.4%,
to $383.4 million at March 31, 2017 from $370.8 million at December 31, 2016. We continue to focus on the acquisition and expansion
of core deposit relationships, which we define as all deposits except for certificates of deposit. Core deposits totaled $360.7
million at March 31, 2017, or 94.0% of total deposits at that date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Total deposits increased $69.1 million,
or 23.0%, to $370.8 million at December 31, 2016 from $301.7 million at December 31, 2015. We continue to focus on the acquisition
and expansion of core deposit relationships. Core deposits totaled $346.8 million at December 31, 2016, or 93.5% of total deposits
at that date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Total deposits increased $10.9 million,
or 3.8%, to $301.7 million at December 31, 2015 from $290.8 million at December 31, 2014. Core deposits totaled $291.8 million
at December 31, 2015, or 96.7% of total deposits at that date.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following tables set forth the distribution
of average deposits by account type at the dates indicated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="10" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">For
    the Three Months Ended March 31,</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="10" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">For
    the Years Ended December 31,</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="10" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2017</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="10" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Average<BR>
    Balance</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Average<BR>
    Rate</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Average</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Balance</B></FONT></P></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Average<BR>
    Rate</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="22" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars in thousands)</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 22%">Demand</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">125,949</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">34.51</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">0.00</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">105,035</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">32.29</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">0.00</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Savings, NOW and Money Market</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">222,257</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">60.90</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.20</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">203,185</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">62.47</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.20</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt">Time</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">16,755</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4.59</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">0.54</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">17,041</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5.24</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">0.42</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total deposits</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">364,961</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100.00</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">0.15</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">325,261</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100.00</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">0.16</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="22" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">For
    the Years Ended December 31,</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="10" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2015</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="10" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2014</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Average<BR>
    Balance</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Average<BR>
    Rate</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Average</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Balance</B></FONT></P></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Average<BR>
    Rate</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="22" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars in thousands)</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 22%">Demand</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">95,820</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">33.83</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">0.00</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">72,202</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">29.60</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">0.00</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Savings, NOW and Money Market</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">176,892</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">62.46</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.20</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">158,596</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">65.02</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.22</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt">Time</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10,494</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3.71</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: right">0.74</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">13,107</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5.38</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: right">0.70</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total deposits</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">283,206</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100.00</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: right">0.15</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">243,905</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100.00</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: right">0.18</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">As of March 31, 2017, the aggregate amount of
all our certificates of deposit in amounts greater than or equal to $100,000 was approximately $18.6 million. The following table
sets forth the maturity of these certificates as of March 31, 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 75%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">At<BR> March 31, 2017</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(In thousands)</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold">Maturing period:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 87%">Three months or less</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">14,604</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Over three months through six months</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,057</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Over six months through twelve months</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,193</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Over twelve months</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,753</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total Certificates</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">18,607</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Borrowings</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">At March 31, 2017, we had the ability to borrow
a total of $78.8 million from the Federal Home Loan Bank of New York. We also had an available line of credit with the Federal
Reserve Bank of New York discount window of $15.1 million. At March 31, 2017, we also had a $3.5 million and $4.0 million line
of credit with Atlantic Community Bankers&rsquo; Bank and Zions Bank, respectively. No amounts were outstanding on any of the aforementioned
lines as of March 31, 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">At December 31, 2016, we had the ability to
borrow a total of $72.8 million from the Federal Home Loan Bank of New York. At December 31, 2016, we also had an available line
of credit with the Federal Reserve Bank of New York discount window of $15.6 million. At December 31, 2016, we also had a $3.5
million and $4.0 million line of credit with Atlantic Community Bankers&rsquo; Bank and Zions Bank, respectively. No amounts were
outstanding on any of the aforementioned lines as of December 31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">At December 31, 2015, we had the ability
to borrow a total of $69.4 million from the Federal Home Loan Bank of New York. At December 31, 2015, we also had an available
line of credit with the Federal Reserve Bank of New York discount window of $10.8 million. At December 31, 2015, we also had a
$3.5 million and $4.0 million line of credit with Atlantic Community Bankers&rsquo; Bank and Zions Bank, respectively. No amounts
were outstanding on any of the aforementioned lines as of December 31, 2015.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Stockholders&rsquo; Equity </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Total stockholders&rsquo; equity increased $1.1
million, or 2.0%, to $53.2 million at March 31, 2017, from $52.2 million at December 31, 2016. The increase for the three months
ended March 31, 2017 was primarily due to $815,000 in net income.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Total stockholders&rsquo; equity increased $2.8
million, or 5.6%, to $52.2 million at December 31, 2016, from $49.4&nbsp;million at December 31, 2015. The increase for the year
ended December 31, 2016 was primarily due to $2.8&nbsp;million in net income.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Total stockholders&rsquo; equity increased
$10.9 million, or 28.2%, to $49.4 million at December 31, 2015, from $38.5 million at December 31, 2014. The increase for the
year ended December 31, 2015 was due primarily to a $9.8 million capital raise through issuance of stock and $1.2 million in net
income, partially offset by a $184,000 increase in accumulated other comprehensive loss due to changes in the fair value of securities
available for sale.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Average Balance Sheets and Related Yields and Rates </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following tables present average balance
sheet information, interest income, interest expense and the corresponding average yields earned and rates paid for the three months
ended March 31, 2017 and 2016 and for the years ended December&nbsp;31, 2016, 2015 and 2014. The average balances are daily averages
and, for loans, include both performing and nonperforming balances. Interest income on loans includes the effects of discount accretion
and net deferred loan origination costs accounted for as yield adjustments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 88%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="22" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">For
    the Three Months Ended March 31,</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="10" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2017</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="10" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="22" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars in thousands)</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Average</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Balance</B></FONT></P></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Interest</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Average</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Yield/Rate</B></FONT></P></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Average</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Balance</B></FONT></P></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Interest</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Average</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Yield/Rate</B></FONT></P></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">INTEREST EARNING ASSETS</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 22%; text-indent: -0.1in; padding-left: 0.1in">Loans</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">278,188</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">3,827</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">5.58</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">228,007</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">3,225</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">5.69</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Securities, includes restricted stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">99,409</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">528</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.15</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">84,525</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">473</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.25</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Interest earning cash</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">33,888</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">77</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.92</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">29,322</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">35</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.48</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Total interest earning assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">411,485</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,432</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.37</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">341,854</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,733</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.39</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">NON-INTEREST EARNING ASSETS</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Cash and due from banks</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">523</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">554</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Other assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">8,644</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9,068</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">TOTAL AVERAGE ASSETS</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">420,652</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">351,476</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">INTEREST-BEARING LIABILITIES</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Savings, NOW, Money Markets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">222,257</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">109</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.20</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">183,579</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">90</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.20</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Time deposits</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">16,755</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">22</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.53</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">12,275</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.16</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Total deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">239,012</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">131</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.22</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">195,854</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">95</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.20</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Secured borrowings</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">343</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">7.09</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">382</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6.32</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Total borrowings</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">343</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">7.09</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">382</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6.32</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Total interest-bearing liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">239,355</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">137</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.23</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">196,236</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">101</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.21</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">NON-INTEREST BEARING LIABILITIES</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Demand deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">125,949</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">102,711</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Other liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,435</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,267</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Total non-interest bearing liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">128,384</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">104,978</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Stockholders&rsquo; equity</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">52,913</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,262</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">TOTAL AVERAGE LIABILITIES AND EQUITY</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">420,652</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">351,476</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Net interest spread</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4,295</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4.14</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,632</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4.18</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Net interest margin</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">4.23</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 2.5pt double">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 2.5pt double">4.27</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


<!-- Field: Page; Sequence: 61 -->
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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="34" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Year
    Ended December 31,</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="10" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="10" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2015</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="10" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2014</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="34" NOWRAP STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars in thousands)</FONT></TD><TD NOWRAP STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Average</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Balance</B></FONT></P></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Interest</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Average</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Yield/Rate</B></FONT></P></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Average</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Balance</B></FONT></P></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Interest</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Average</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Yield/Rate</B></FONT></P></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Average</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Balance</B></FONT></P></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Interest</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Average</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Yield/Rate</B></FONT></P></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">INTEREST EARNING ASSETS</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 19%; text-indent: -0.1in; padding-left: 0.1in">Loans</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">248,068</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">14,071</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 6%; text-align: right">5.67</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">187,317</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">10,594</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 6%; text-align: right">5.66</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">147,330</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 6%; text-align: right">8,891</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 6%; text-align: right">6.03</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Securities, includes restricted stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">87,830</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,875</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.13</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">78,021</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,713</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.20</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">75,282</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,722</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.29</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Interest earning cash</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">32,849</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">222</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.68</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">55,309</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">144</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.26</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">42,989</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">101</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.23</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Total interest earning assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">368,747</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,168</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.38</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">320,647</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,451</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.88</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">265,601</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,714</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.03</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">NON-INTEREST EARNING ASSETS</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Cash and due from banks</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">550</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">556</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,994</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Other assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">11,397</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">8,509</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">8,717</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">TOTAL AVERAGE ASSETS</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">380,694</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">329,712</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">277,312</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">INTEREST-BEARING LIABILITIES</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Savings, NOW, Money Markets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">203,185</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">414</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.20</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">176,892</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">353</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.20</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">158,596</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">345</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.22</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Time deposits</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">17,041</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">72</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.42</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10,494</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">78</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.74</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">13,107</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">92</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.70</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Total deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">220,226</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">486</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.22</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">187,386</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">431</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.23</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">171,703</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">437</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.25</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Secured borrowings</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">405</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">25</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6.17</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">388</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">26</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6.70</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">449</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">29</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6.46</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Total borrowings</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">405</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">25</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6.17</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">388</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">26</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6.70</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">449</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">29</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6.46</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Total interest-bearing liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">220,631</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">511</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.23</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">187,774</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">457</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.24</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">172,152</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">466</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.27</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">NON-INTEREST BEARING LIABILITIES</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Demand deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">105,035</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">95,820</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">72,202</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Other liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,391</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,008</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,605</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Total liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">107,426</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">97,828</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">73,807</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Stockholders&rsquo; equity</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">52,637</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">44,110</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31,353</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">TOTAL AVERAGE LIABILITIES AND EQUITY</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">380,694</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">329,712</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">277,312</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Net interest spread</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">15,657</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4.15</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">11,994</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3.64</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">10,248</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3.76</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Net interest margin</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4.25</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3.74</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3.86</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD></TR>
</TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">&nbsp;</P>


<!-- Field: Page; Sequence: 62; Options: NewSection; Value: 58 -->
    <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->58<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><A HREF="#TableOfContents">Table of Contents</A>&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following table presents the dollar amount
of changes in interest income and interest expense for major components of interest earning assets and interest bearing liabilities
for the periods indicated. The table distinguishes between: (1) changes attributable to volume (changes in volume multiplied by
the prior period&rsquo;s rate); (2) changes attributable to rate (change in rate multiplied by the prior year&rsquo;s volume) and
(3) total increase (decrease) (the sum of the previous columns). Changes attributable to both volume and rate are allocated ratably
between the volume and rate categories.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="10" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">For
    the Three Months Ended<BR> March 31,<BR> 2017 vs. 2016</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="10" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">For
    the Year Ended<BR> December 31,<BR> 2016 vs. 2015</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Increase<BR>
    (Decrease) due to</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Increase<BR>
    (Decrease) due to</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-size: 1pt; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-size: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-size: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Volume</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Rate</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Total<BR>
    Increase<BR> (Decrease)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Volume</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Rate</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Total<BR>
    Increase<BR> (Decrease)</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="22" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(dollars in thousands)</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -12pt; padding-left: 12pt">Interest earned on:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 46%">Loans</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">668</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">(66</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">602</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">3,446</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">31</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">3,477</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Securities, includes restricted stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">77</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(22</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">55</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">210</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(48</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">162</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Interest earning cash</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">36</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">42</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(77</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">155</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">78</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 12pt">Total interest income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">751</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(52</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">699</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,579</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">138</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,717</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -12pt; padding-left: 12pt">Interest paid on:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Savings, NOW, Money Markets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">19</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">54</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">61</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Time deposits</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">15</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">17</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">36</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(42</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(6</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Total deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">36</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">90</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(35</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">55</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Secured borrowings</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 12pt">Total interest expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">19</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">17</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">36</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">91</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(37</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">54</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -12pt; padding-left: 12pt">Change in net interest income</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">732</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(69</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">663</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,488</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">175</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,663</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="10" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">For
    the Years Ended<BR> December 31,<BR> 2015 vs. 2014</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Increase<BR>
    (Decrease) due to</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">Total<BR>
    Increase</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Volume</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Rate</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">(Decrease)</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="10" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(dollars in thousands)</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -12pt; padding-left: 12pt">Interest earned on:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 61%">Loans</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">2,290</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(587</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">1,703</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Securities, includes restricted stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">61</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(70</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(9</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Interest earning cash</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">31</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">12</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">43</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 12pt">Total interest income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,382</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(645</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,737</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -12pt; padding-left: 12pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -12pt; padding-left: 12pt">Interest paid on:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Savings, NOW, Money Markets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(30</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Time deposits</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(19</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(14</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Total deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">19</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(25</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(6</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Secured borrowings</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(4</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(3</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 12pt">Total interest expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">15</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(24</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(9</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -12pt; padding-left: 12pt">Change in net interest income</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,367</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(621</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,746</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Results of Operations for the Three Months
Ended March 31, 2017 and 2016</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>General. </I></B>Net income increased
$172,000 or 26.8%, to $815,000 for the three months ended March 31, 2017 from $643,000 for the three months ended March 31, 2016.
The increase resulted from a $663,000 increase in net interest income and a $217,000 increase in noninterest income, which were
partially offset by a $604,000 increase in noninterest expense.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><A HREF="#TableOfContents">Table of Contents</A>&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Interest Income. </I></B>Interest income
increased $699,000, or 18.7%, to $4.4 million for the three months ended March 31, 2017 from $3.7 million for the three months
ended March 31, 2016. This was attributable to an increase in interest and fees on loans, which increased $602,000, or 18.7%, to
$3.8 million for the three months ended March 31, 2017 from $3.2 million for the three months ended March 31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The increase in interest income on loans was
due to an increase in average balance of loans of $50.2 million, or 22.0%, to $278.2 million for the three months ended March 31,
2017 from $228.0 million for the three months ended March 31, 2016. This increase was due to our continued success in growing our
loans.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Interest Expense. </I></B>Interest expense
increased $36,000, or 35.6%, to $137,000 for the three months ended March 31, 2017 from $101,000 for the three months ended March
31, 2016, caused by an increase in average-interest bearing deposits. The average rate we paid on interest bearing deposits increased
2 basis points to 0.23% for the three months ended March 31, 2017 from 0.20% for the three months ended March 31, 2016. Our average
balance of interest bearing deposits increased $43.2 million, or 22%, to $239.0 million for the three months ended March 31, 2017
from $195.9 million for the three months ended March 31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Net Interest Income. </I></B>Net interest
income increased $663,000, or 18.3%, to $4.3 million for the three months ended March 31, 2017 from $3.6 million for the three
months ended March 31, 2016. Our net interest rate spread decreased four basis points to 4.14% for the three months ended March
31, 2017 from 4.18% for the three months ended March 31, 2016, while our net interest margin decreased four basis points to 4.23%
for the three months ended March 31, 2017 from 4.27% for the three months ended March 31, 2016. The average yield we earned on
interest earning assets decreased two basis points to 4.37% and the average rate we paid on interest bearing liabilities increased
by two basis points to 0.23%.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 38.5pt"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 38.5pt"><B><I>Provision for Loan Losses. </I></B>Our
provision for loan losses was $150,000 for the three months ended March 31, 2017 compared to $145,000 for the three months ended
March 31, 2016. The provisions recorded resulted in an allowance for loan losses of $3.5 million, or 1.21% of total loans at March
31, 2017, compared to $3.0 million, or 1.26% of total loans at March 31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Noninterest Income. </I></B>Noninterest
income information is as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">For
    the Three Months<BR> Ended March 31,</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Change</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2017</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amount</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="14" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars in thousands)</FONT></TD><TD STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Noninterest income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 48%; text-align: left">Customer related fees and service charges</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">366</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">228</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">138</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">60.53</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Merchant processing income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">838</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">753</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">85</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11.29</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Gains of sales of securities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(6</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(100.00</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Total noninterest income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1,204</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">987</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">217</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21.99</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Merchant processing income increased primarily
due to revenue from ACH fees, an addition to the services offered as part of merchant processing. Customer related fees and charges
have also increased due to overall increases in the balances and count of our deposit customers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="margin: 0"></P>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><A HREF="#TableOfContents">Table of Contents</A>&nbsp;</DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Noninterest Expense.</I></B> Noninterest
expense information is as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">For
    the Three<BR> Months Ended<BR> March 31,</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Change</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2017</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amount</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="14" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars in thousands)</FONT></TD><TD STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Noninterest expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 48%; text-align: left">Employee compensation and benefits</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">2,345</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">1,962</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">383</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">19.52</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Occupancy and equipment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">387</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">282</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">105</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">37.23</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Professional and consulting services</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">389</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">413</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(24</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(5.81</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">FDIC assessment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">42</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(8</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(16.00</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Advertising and marketing</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">110</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">143</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(33</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(23.08</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Travel and business relations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">106</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">74</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">32</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">43.24</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; width: 48%">OCC assessments</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="text-align: right; width: 10%">29</TD><TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="text-align: right; width: 10%">26</TD><TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="text-align: right; width: 10%">3</TD><TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="text-align: right; width: 10%">11.54</TD><TD STYLE="text-align: left; width: 1%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Data processing</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">370</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">339</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.14</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Other operating expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">246</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">131</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">115</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">87.79</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Total noninterest expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">4,024</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">3,420</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">604</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17.66</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Salaries and employee benefits increased for
the three months ended March 31, 2017 from the three months ended March 31, 2016 primarily due to increases in the number of employees,
increases in incentive compensation tied to performance and salary increases. Occupancy and equipment expense increased primarily
due to additional expense from the new lease for our new headquarters that commenced in the fourth quarter of 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Income Tax Expense. </I></B>We recorded
an income tax expense of $510,000 for the three months ended March 31, 2017, reflecting an effective tax rate of 38.5%, compared
to $411,000, or 39.0%, for the three months ended March 31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Results of Operations for the Years Ended
December 31, 2016 and 2015 </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>General. </I></B>Net income increased
$1.7 million or 140.8%, to $2.8 million for the year ended December 31, 2016 from $1.2 million for the year ended December 31,
2015. The increase resulted from a $3.7 million increase in net interest income and an $1.2 million increase in noninterest income,
which were partially offset by a $2.4 million increase in noninterest expense.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Interest Income. </I></B>Interest income
increased $3.7 million or 29.9%, to $16.2 million for the year ended December 31, 2016 from $12.5 million for the year ended December
31, 2015. This was attributable to an increase in interest and fees on loans, which increased $3.5 million, or 32.8%, to $14.1
million for the year ended December 31, 2016 from $10.6 million for the year ended December 31, 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The increase in interest income on loans was
due to an increase in average balance of loans of $60.8 million, or 32.4%, to $248.1 million for the year ended December 31, 2016
from $187.3 million for the year ended December&nbsp;31, 2015. This increase was due to our continued success in growing multifamily
loans, commercial real estate loans, commercial loans and consumer loans.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Interest Expense. </I></B>Interest expense
increased $54,000, or 11.8%, to $511,000 for the year ended December&nbsp;31, 2016 from $457,000 for the year ended December&nbsp;31,
2015, caused by an increase in average-interest bearing deposits. The average rate we paid on interest bearing deposits decreased
1 basis point to 0.22% for the year ended December&nbsp;31, 2016 from 0.23% for the year ended December&nbsp;31, 2015. Our average
balance of interest bearing deposits increased $26.3 million, or 14.9%, to $203.2 million for the year ended December&nbsp;31,
2016 from $176.9&nbsp;million for the year ended December&nbsp;31, 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Net Interest Income. </I></B>Net interest
income increased $3.7 million, or 30.5%, to $15.7 million for the year ended December&nbsp;31, 2016 from $12.0 million for the
year ended December&nbsp;31, 2015. Our net interest rate spread increased 51 basis points to 4.15% for the year ended December&nbsp;31,
2016 from 3.64% for the year ended December&nbsp;31, 2015, while our net interest margin increased 51 basis points to 4.25% for
the year ended December&nbsp;31, 2016 from 3.74% for the year ended December&nbsp;31, 2015. Although the average yield we earned
on interest earning assets increased 50 basis points to 4.38%, we were able to decrease the average rate we paid on interest bearing
liabilities by 1 basis point to 0.22%.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 38.5pt"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 38.5pt"><B><I>Provision for Loan Losses. </I></B>Our
provision for loan losses was $595,000 for the year ended December&nbsp;31, 2016 compared to $930,000 for the year ended December&nbsp;31,
2015. The provisions recorded resulted in an allowance for loan losses of $3.4 million, or 1.23% of total loans at December 31,
2016, compared to $2.8 million, or 1.25% of total loans at December 31, 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></P>


<!-- Field: Page; Sequence: 65; Value: 58 -->
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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><A HREF="#TableOfContents">Table of Contents</A>&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Noninterest Income. </I></B>Noninterest
income information is as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font: 8pt Times New Roman, Times, Serif"><B>For
    the Year Ended</B></FONT><FONT STYLE="font-size: 8pt"><BR>
    <FONT STYLE="font-family: Times New Roman, Times, Serif"><B>December 31,</B></FONT></FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font: 8pt Times New Roman, Times, Serif"><B>Change</B></FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font: 8pt Times New Roman, Times, Serif"><B>2016</B></FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font: 8pt Times New Roman, Times, Serif"><B>2015</B></FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font: 8pt Times New Roman, Times, Serif"><B>Amount</B></FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font: 8pt Times New Roman, Times, Serif"><B>Percent</B></FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="14" STYLE="text-align: center"><FONT STYLE="font: 8pt Times New Roman, Times, Serif"><B>(Dollars
    in thousands)</B></FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 48%"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Noninterest income</B></FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 10%; text-align: right">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 10%; text-align: right">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 10%; text-align: right">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 10%; text-align: right">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Customer related fees and service charges</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">1,180</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">741</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">439</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">59.2</FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Merchant processing income</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2,939</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2,202</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">737</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">33.5</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Gains of sales of securities</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">6</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&mdash;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">6</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid">&nbsp;</TD>
    <TD STYLE="text-align: right; border-bottom: Black 1pt solid"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">N/A</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Total noninterest income</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">4,125</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2,943</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">1,182</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">40.2</FONT></TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">%</FONT></TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Merchant processing income increased significantly
due to significant growth in our business. Average monthly volumes increased to $302.8 million for 2016 compared to $269.2 million
for 2015. Customer related fees and charges have increased due to overall increases in the balances and count of our deposit customers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Noninterest Expense.</I></B> Noninterest
expense information is as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">For
    the Year Ended<BR> December 31,</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Change</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2015</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amount</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="14" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars in thousands)</FONT></TD><TD STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Noninterest expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 48%; text-align: left">Employee compensation and benefits</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">8,244</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">6,251</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">1,993</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">31.9</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Occupancy and equipment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,604</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,412</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">192</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13.6</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Professional and consulting services</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,642</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,699</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(57</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3.4</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">FDIC assessment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">99</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">245</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(146</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(59.6</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Advertising and marketing</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">430</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">334</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">96</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">28.7</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Travel and business relations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">324</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">301</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7.6</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">OCC assessments</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">112</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">105</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6.7</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Data processing</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,369</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,187</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">182</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15.3</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Other operating expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">775</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">637</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">138</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">21.7</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Total noninterest expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">14,599</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">12,171</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">2,428</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">19.9</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Salaries and employee benefits increased for
the year ended December&nbsp;31, 2016 from the year ended December&nbsp;31, 2015 primarily due to increases in the number of employees,
increases in incentive compensation tied to performance and salary increases. Occupancy and equipment expense increased primarily
due to write-offs related to the closure of our New York City administrative office.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Income Tax Expense. </I></B>We recorded
an income tax expense of $1.8 million for the year ended December&nbsp;31, 2016, reflecting an effective tax rate of 38.5%, compared
to $664,000, or 36.2%, for the year ended December&nbsp;31, 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-align: justify"><B>Results of Operations for the
Years Ended December 31, 2015 and 2014 </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 0.5in"><B><I>General. </I></B>Net income
increased $1.1 million, to $1.2 million for the year ended December 31, 2015 from $41,000 for the year ended December 31, 2014.
The increase was due to an increase in net interest income and noninterest income.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 0.5in"><B><I>Interest Income. </I></B>Interest
income increased $1.7 million, or 16.3%, to $12.5 million for the year ended December 31, 2015 from $10.7 million for the year
ended December 31, 2014. This was caused by an increase in interest and fees on loans, which increased $1.7 million, or 19.2%,
to $10.6 million for the year ended December 31, 2015 from $8.9 million for the year ended December 31, 2014.</P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 0.5in">The increase in interest income on
loans was due to an increase in the average balance of loans of $40.0 million, or 27.1%, to $187.3 million for the year ended
December 31, 2015 from $147.3 million for the year ended December 31, 2014. This increase was due to our continued success in
growing residential real estate, multifamily, commercial real estate loans, commercial, and consumer loans. The increase in average
balance of loans was partially offset by a 37 basis point decrease in yield, to 5.66% for the year ended December 31, 2015 from
6.03% for the year ended December 31, 2014, due to the continued payoff of higher-yielding loans and our originating new loans
in a lower interest rate environment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 0.5in">Interest on investment
securities decreased $9,000 to $1.7 million of the year ended December 31, 2015. An increase in average balance of $2.7
million, or 3.6%, offset a 9 basis point decrease in yield on investment securities to 2.20% during the year ended December
31, 2015 from 2.29% for the year ended December 31, 2014. We have been able to use excess cash to originate loans that
provide higher interest rates than the rates we could receive on investment securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 0.5in"><B><I>Interest Expense. </I></B>Interest
expense decreased $9,000, or 1.9%, to $457,000 for the year ended December 31, 2015 from $466,000 for the year ended December
31, 2014, caused by a decrease in interest expense on time deposits. The decrease in interest expense on time deposits is primarily
driven by lower average balances which decreased $2.6 million or 19.9% for the year ended December 31, 2015 from December 31,
2014.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 0.5in">Interest expense on deposits was
$431,000 and $437,000 for the years ended December 31, 2015 and 2014. However, our average balance of
interest-bearing deposits increased $15.7 million, or 9.1%, to $187.4 million for the year ended December 31, 2015 from
$171.7 million for the year ended December 31, 2014. The increase resulted from increases in the average balance of all
deposit categories, except for time deposits. The increase in our average balance of interest-bearing deposits was primarily
due to an increase savings, NOW, and money market accounts, which increased $18.3 million, or 11.5%, to $176.9 million for
the year ended December 31, 2015 from $158.6 million for the year ended December 31, 2014. However, the average interest rate
we paid on savings, NOW and money market accounts decreased 2 basis points to 0.20% for the year ended December 31, 2015 from
0.22% for the year ended December 31, 2014.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 0.5in">Our overall cost of funds for the
year ended December 31, 2015 was enhanced by an increase in average non-interest bearing deposits, which increased $23.6 million
to $95.8 million for the year ended December 31, 2015 from $72.2 million for the year ended December 31, 2014, as we have been
successful in obtaining non-interest bearing deposits from commercial loan customers as well as from our merchant services customers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 0.5in"><B><I>Net Interest Income. </I></B>Net
interest income increased $1.8 million, or 17.0%, to $12.0 million for the year ended December 31, 2015 from $10.2 million for
the year ended December 31, 2014.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 0.5in">Our net interest rate spread decreased
12 basis points to 3.64% for the year ended December 31, 2015 from 3.76% for the year ended December 31, 2014, while our net interest
margin decreased 12 basis points to 3.74% for the year ended December 31, 2015 from 3.86% for the year ended December 31, 2014.
The average yield we earned on interest-earning assets decreased, however, at the same time we were able to decrease the average
rate we paid on interest-bearing liabilities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 38.5pt"><B><I>Provision for Loan Losses.
</I></B>Our provision for loan losses was $930,000 for the year ended December 31, 2015 compared to $300,000 for the year ended
December 31, 2014. The provisions recorded resulted in an allowance for loan losses of $2.8 million, or 1.25% of total loans at
December 31, 2015, compared to $2.2 million, or 1.25% of total loans at December 31, 2014. The higher provision for loan losses
was a result of the growth in the loan portfolio and related impact to the allowance for loan losses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 38.5pt"><B><I>Noninterest Income.</I></B>
Noninterest income information is as follows:</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; border-bottom: Black 0.5pt solid"><B>Years
        Ended December 31,</B></P></TD>
    <TD NOWRAP COLSPAN="2"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; border-bottom: Black 0.5pt solid"><B>Change</B></P></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="width: 48%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 13%"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; border-bottom: Black 0.5pt solid"><B>2015</B></P></TD>
    <TD NOWRAP STYLE="width: 13%"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; border-bottom: Black 0.5pt solid"><B>2014</B></P></TD>
    <TD NOWRAP STYLE="width: 13%"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; border-bottom: Black 0.5pt solid"><B>Amount</B></P></TD>
    <TD NOWRAP STYLE="width: 13%"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; border-bottom: Black 0.5pt solid"><B>Percent</B></P></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP COLSPAN="4" STYLE="text-align: center; font-size: 10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>(Dollars
    in thousands)</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-size: 10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Noninterest
    income</B></FONT></TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-size: 10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Customer related
    fees and service charges&#9;</FONT></TD>
    <TD NOWRAP STYLE="text-align: right; font-size: 10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">$&nbsp;&nbsp;&nbsp;&nbsp;741</FONT></TD>
    <TD NOWRAP STYLE="text-align: right; font-size: 10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">$&nbsp;&nbsp;&nbsp;&nbsp;471</FONT></TD>
    <TD NOWRAP STYLE="text-align: right; font-size: 10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">$&nbsp;&nbsp;&nbsp;&nbsp;270</FONT></TD>
    <TD NOWRAP STYLE="text-align: right; font-size: 10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">57.3%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-size: 10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Merchant processing
    income&#9;</FONT></TD>
    <TD NOWRAP STYLE="text-align: right; font-size: 10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2,202</FONT></TD>
    <TD NOWRAP STYLE="text-align: right; font-size: 10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">1,143</FONT></TD>
    <TD NOWRAP STYLE="text-align: right; font-size: 10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">1,059</FONT></TD>
    <TD NOWRAP STYLE="text-align: right; font-size: 10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">92.7</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-size: 10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Gains on sales
    of securities&#9;</FONT></TD>
    <TD NOWRAP><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; border-bottom: Black 0.5pt solid; text-align: right">&#8213;</P></TD>
    <TD NOWRAP><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; border-bottom: Black 0.5pt solid; text-align: right">151</P></TD>
    <TD NOWRAP><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; border-bottom: Black 0.5pt solid; text-align: right">(151)</P></TD>
    <TD NOWRAP><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; border-bottom: Black 0.5pt solid; text-align: right">(100.0)</P></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-size: 10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Total noninterest
    income</B>&#9;</FONT></TD>
    <TD NOWRAP STYLE="text-align: right; font-size: 10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">$&nbsp;&nbsp;2,943</FONT></TD>
    <TD NOWRAP STYLE="text-align: right; font-size: 10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">$&nbsp;&nbsp;1,765</FONT></TD>
    <TD NOWRAP STYLE="text-align: right; font-size: 10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">$&nbsp;&nbsp;1,178</FONT></TD>
    <TD NOWRAP STYLE="text-align: right; font-size: 10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">66.7%</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 38.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 38.5pt">Merchant processing income increased
significantly during the year due to significant growth in our business. Total active merchants as of December 31, 2015 were approximately
9,500 compared to approximately 6,500 active merchants as of December 31, 2014. Customer related fees and charges have increased
due to overall increases in the balances and count of our deposit customers.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 0.5in"><B><I>Noninterest Expense.</I></B>
Noninterest expense information is as follows.</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; border-bottom: Black 0.5pt solid"><B>Years
        Ended December 31,</B></P></TD>
    <TD NOWRAP COLSPAN="2"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; border-bottom: Black 0.5pt solid"><B>Change</B></P></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="width: 42%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 16%"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; border-bottom: Black 0.5pt solid"><B>2015</B></P></TD>
    <TD NOWRAP STYLE="width: 16%"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; border-bottom: Black 0.5pt solid"><B>2014</B></P></TD>
    <TD NOWRAP STYLE="width: 15%"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; border-bottom: Black 0.5pt solid"><B>Amount</B></P></TD>
    <TD NOWRAP STYLE="width: 11%"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; border-bottom: Black 0.5pt solid"><B>Percent</B></P></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP COLSPAN="4" STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(Dollars
    in thousands)</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Noninterest expense</B></FONT></TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Employee compensation and benefits&#9;</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$&nbsp;&nbsp;&nbsp;&nbsp;6,251</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$&nbsp;&nbsp;&nbsp;&nbsp;5,525</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;726</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">13.1%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Occupancy and equipment&#9;</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1,412</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1,774</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(362)</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(20.4)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Professional and consulting services&#9;</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1,699</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1,065</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">634</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">59.5</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">FDIC assessment&#9;</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">245</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">306</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(61)</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(19.9)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Advertising and marketing&#9;</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">334</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">367</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(33)</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(9.0)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Travel and business relations&#9;</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">301</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">296</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.7</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">OCC assessments&#9;</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">105</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">130</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(25)</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(19.2)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Data processing&#9;</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1,187</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1,103</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">84</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">7.6</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other operating expenses&#9;</FONT></TD>
    <TD NOWRAP><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; border-bottom: Black 0.5pt solid; text-align: right">637</P></TD>
    <TD NOWRAP><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; border-bottom: Black 0.5pt solid; text-align: right">696</P></TD>
    <TD NOWRAP><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; border-bottom: Black 0.5pt solid; text-align: right">(59)</P></TD>
    <TD NOWRAP><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; border-bottom: Black 0.5pt solid; text-align: right">(8.5)</P></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Total noninterest expense</B>&#9;</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$&nbsp;&nbsp;&nbsp;12,171</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$&nbsp;&nbsp;11,262</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;909</FONT></TD>
    <TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">8.1%</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-align: justify; text-indent: 0.5in">Salaries and
employee benefits increased for the year ended December 31, 2015 from the year ended December 31, 2014 primarily due to increases
in employees, increases in incentive compensation tied to performance and salary increases. Professional and consulting expenses
increased primarily due to our charter conversions and corporate reorganization. Occupancy and equipment expense decreased primarily
due to the consolidation of our office facilities in New York City.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 0.5in">&nbsp;<B><I>Income Tax Provision.
</I></B><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We recorded a provision for income taxes of
$664,000 for the year ended December 31, 2015, reflecting an effective tax rate of 36.2%, compared to $410,000 or an effective
tax rate of 90.9%, for the year ended December 31, 2014. The higher effective tax rate in 2014 was due to additional New York
state income tax expense to adjust our state deferred tax assets and liabilities using newly exacted New York state income tax
rates and apportionment changes.</FONT></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Management of Market Risk </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>General</I></B>. The principal objective
of our asset and liability management function is to evaluate the interest rate risk within the balance sheet and pursue a controlled
assumption of interest rate risk while maximizing net income and preserving adequate levels of liquidity and capital. The board
of directors of our bank has oversight of our asset and liability management function, which is managed by our Asset/Liability
Management Committee. Our Asset/Liability Management Committee meets regularly review, among other things, the sensitivity of our
assets and liabilities to market interest rate changes, local and national market conditions and market interest rates. That group
also reviews our liquidity, capital, deposit mix, loan mix and investment positions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">As a financial institution, our primary component
of market risk is interest rate volatility. Fluctuations in interest rates will ultimately impact both the level of income and
expense recorded on most of our assets and liabilities, and the fair value of all interest earning assets and interest bearing
liabilities, other than those which have a short term to maturity. Interest rate risk is the potential of economic losses due to
future interest rate changes. These economic losses can be reflected as a loss of future net interest income and/or a loss of current
fair values. The objective is to measure the effect on net interest income and to adjust the balance sheet to minimize the inherent
risk while at the same time maximizing income.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We manage our exposure to interest rates
primarily by structuring our balance sheet in the ordinary course of business. We do not typically enter into derivative contracts
for the purpose of managing interest rate risk, but we may do so in the future. Based upon the nature of our operations, we are
not subject to foreign exchange or commodity price risk. We do not own any trading assets.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Net Interest Income Simulation. </I></B>We
use an interest rate risk simulation model to test the interest rate sensitivity of net interest income and the balance sheet.
Instantaneous parallel rate shift scenarios are modeled and utilized to evaluate risk and establish exposure limits for acceptable
changes in net interest margin. These scenarios, known as rate shocks, simulate an instantaneous change in interest rates and use
various assumptions, including, but not limited to, prepayments on loans and securities, deposit decay rates, pricing decisions
on loans and deposits, reinvestment and replacement of asset and liability cash flows.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><A HREF="#TableOfContents">Table of Contents</A>&nbsp;</DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following table presents the estimated changes
in net interest income of Esquire Bank, National Association, calculated on a bank-only basis, which would result from changes
in market interest rates over twelve-month periods beginning December 31, 2016 and 2015. The tables below demonstrate that we are
asset-sensitive in a rising interest rate environment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="14" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">At
    December 31,</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP COLSPAN="2"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2015</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Changes
    in<BR> Interest Rates<BR> (Basis Points)</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Estimated
                                         12-</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Months
                                         Net</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Interest</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Income</B></FONT></P></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Change</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Estimated
                                         12-</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Months
                                         Net</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Interest</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Income</B></FONT></P></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Change</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP COLSPAN="18" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars in thousands)</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 18%; text-align: right">400</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 17%; text-align: right">24,445</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 17%; text-align: right">5,519</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 17%; text-align: right">19,462</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 17%; text-align: right">4,491</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">300</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23,083</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,157</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18,360</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,389</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">200</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21,714</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,788</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17,262</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,291</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,339</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,413</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,155</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,184</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18,926</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14,971</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-100</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17,260</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,166</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,802</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,169</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-200</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,220</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,706</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,017</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,954</TD><TD STYLE="text-align: left">)</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Economic Value of Equity Simulation. </I></B>We
also analyze our sensitivity to changes in interest rates through an economic value of equity (&ldquo;EVE&rdquo;) model. EVE represents
the present value of the expected cash flows from our assets less the present value of the expected cash flows arising from our
liabilities adjusted for the value of off-balance sheet contracts. EVE attempts to quantify our economic value using a discounted
cash flow methodology. We estimate what our EVE would be as of a specific date. We then calculate what EVE would be as of the same
date throughout a series of interest rate scenarios representing immediate and permanent, parallel shifts in the yield curve. We
currently calculate EVE under the assumptions that interest rates increase 100, 200, 300 and 400 basis points from current market
rates, and under the assumption that interest rates decrease 100 and 200 basis points from current market rates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following table presents the estimated changes
in EVE of Esquire Bank, National Association, calculated on a bank-only basis, that would result from changes in market interest
rates as of December 31, 2016 and 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="14" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">At
    December 31,</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2015</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Changes
    in<BR> Interest Rates<BR> (Basis Points)</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Economic</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Value
                                         of</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Equity</B></FONT></P></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Change</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Economic</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Value
                                         of</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Equity</B></FONT></P></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Change</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP COLSPAN="18" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars in thousands)</FONT></TD><TD STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 18%; text-align: right">400</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 17%; text-align: right">79,188</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 17%; text-align: right">6,362</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 17%; text-align: right">66,005</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 17%; text-align: right">3,996</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">300</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">78,277</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,451</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">65,377</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,368</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">200</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">77,062</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,236</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">64,751</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,742</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">75,397</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,571</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">63,909</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,900</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">72,826</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">62,009</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#8213;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-100</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">65,985</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(6,841</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">55,246</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(6,763</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-200</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">56,208</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(16,618</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">46,863</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(15,146</TD><TD STYLE="text-align: left">)</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Many assumptions are used to calculate the impact
of interest rate fluctuations. Actual results may be significantly different than our projections due to several factors, including
the timing and frequency of rate changes, market conditions and the shape of the yield curve. The computations of interest rate
risk shown above do not include actions that our management may undertake to manage the risks in response to anticipated changes
in interest rates, and actual results may also differ due to any actions taken in response to the changing rates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Liquidity and Capital Resources</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Liquidity is the ability to meet current and
future financial obligations of a short-term nature. Our primary sources of funds consist of deposit inflows, loan repayments and
maturities and sales of securities. While maturities and scheduled amortization of loans and securities are predictable sources
of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We regularly review the
need to adjust our investments in liquid assets based upon our assessment of: (1) expected loan demand, (2) expected deposit flows,
(3) yields available on interest earning deposits and securities, and (4) the objectives of our asset/liability management program.
Excess liquid assets are invested generally in interest earning deposits and short- and intermediate-term securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our most liquid assets are cash and cash equivalents.
The levels of these assets are dependent on our operating, financing, lending and investing activities during any given period.
At March 31, 2017 and December 31, 2016, cash and cash equivalents totaled $32.6 million and $43.0 million, respectively. Securities
classified as available-for-sale, which provide additional sources of liquidity, totaled $103.7 million at March 31, 2017 and $92.6
million at December 31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">At March 31, 2017, we had the ability to borrow
a total of $78.8 million from the Federal Home Loan Bank of New York. We also had an available line of credit with the Federal
Reserve Bank of New York discount window of $15.1 million. At March 31, 2017, we also had a $3.5 million and $4.0 million line
of credit with Atlantic Community Bankers&rsquo; Bank and Zions Bank, respectively. No amounts were outstanding on any of the aforementioned
lines as of March 31, 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">At December 31, 2016, we had the ability to
borrow a total of $72.8 million from the Federal Home Loan Bank of New York. We also had an available line of credit with the Federal
Reserve Bank of New York discount window of $15.6 million. At December 31, 2016, we also had a $3.5 million and $4.0 million line
of credit with Atlantic Community Bankers&rsquo; Bank and Zions Bank, respectively. No amounts were outstanding on any of the aforementioned
lines as of December 31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We have no material commitments or demands that
are likely to affect our liquidity other than set forth below. In the event loan demand were to increase faster than expected,
or any unforeseen demand or commitment were to occur, we could access our borrowing capacity with the Federal Home Loan Bank of
New York or obtain additional funds through brokered certificates of deposit.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">At March 31, 2017, we had $8.4 million in loan
commitments outstanding. We also had $1.3 million in standby letters of credit at March 31, 2017. At December 31, 2016, we had
$2.0 million in loan commitments outstanding. We also had $1.3 million in standby letters of credit at December 31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Certificates of deposit due within one year
of March 31, 2017 totaled $19.9 million, or 5.2% of total deposits. Total certificates of deposit were $22.7 million or 5.9% of
total deposits. Certificates of deposit due within one year of December 31, 2016 totaled $22.3 million, or 6.0% of total deposits.
Total certificates of deposit were $24.0 million or 6.5% of total deposits.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our primary investing activities are the origination,
and to a lesser extent purchase, of loans and the purchase of securities. During the three months ended March 31, 2017, we originated
or purchased $28.2 million of loans and $15.4 million of securities. During the three months ended March 31, 2016, we originated
or purchased $15.3 million of loans and purchased no securities. During the year ended December 31, 2016, we originated or purchased
$125.2 million of loans and $30.2 million of securities. During the year ended December 31, 2015, we originated or purchased $121.7
million of loans and we purchased $24.7 million of securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Financing activities consist primarily of activity
in deposit accounts. We experienced an increase in total deposits of $12.6 million and a decrease in total deposits of $3.2 million
for the three months ended March 31, 2017 and 2016, respectively. We experienced net increases in total deposits of $69.1 million
and $10.9 million for the years ended December 31, 2016 and 2015, respectively. We generate deposits from law firms, other local
businesses, and individuals through client referrals and other relationships and through our retail presence. We believe we have
a very stable core deposit base due primarily to the litigation market strategy as we strongly encourage and are generally successful
in having law firm borrowers maintain their entire banking relationship with us. The high level of transaction accounts is expected
to be maintained. We have established deposit concentration thresholds to avoid the possibility of dependence on any single depositor
base for funds. Since inception, we have not had the need to borrow significantly from the Federal Home Loan Bank of New York.
We have been able to use the cash generated from the increases in deposits to fund loan growth in recent periods.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Esquire Bank, National Association is subject
to various regulatory capital requirements administered by Office of the Comptroller of the Currency, and the Federal Deposit Insurance
Corporation. At March 31, 2017 and December 31, 2016, Esquire Bank exceeded all applicable regulatory capital requirements, and
was considered &ldquo;well capitalized&rdquo; under regulatory guidelines. See Note 14 of the Notes to the Consolidated Financial
Statements for additional information.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The net proceeds from the stock offering will
significantly increase our liquidity and capital resources. Over time, the initial level of liquidity will be reduced as net proceeds
from the stock offering are used for general corporate purposes, including the funding of loans. Our financial condition and results
of operations will be enhanced by the net proceeds from the stock offering, resulting in increased net interest earning assets
and net interest income. However, due to the increase in equity resulting from the net proceeds raised in the stock offering, as
well as other factors associated with the stock offering, our return on equity will be adversely affected following the stock offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We manage our capital to comply with our internal
planning targets and regulatory capital standards administered by the OCC. We review capital levels on a monthly basis. At March
31, 2017 and December 31, 2016, Esquire Bank was classified as well-capitalized.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">On November 2, 2012, the OCC notified Esquire
Bank that it had established minimum capital ratios for Esquire Bank requiring Esquire Bank to maintain, commencing December
1, 2012, a Tier 1 leverage capital ratio of 9.0%, a Tier1 risk-based capital ratio of 11.0% and a total risk-based capital to
risk-weighted assets ratio of 13.0%.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following table presents our capital ratios
as of the indicated dates for Esquire Bank.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">&ldquo;Well&nbsp;Capitalized&rdquo;</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">For&nbsp;Capital&nbsp;Adequacy<BR>
    Purposes<BR> Minimum&nbsp;Capital&nbsp;with<BR> Conservation&nbsp;Buffer</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">OCC<BR>
    Minimum&nbsp;Capital&nbsp;<BR> Ratios</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Actual&nbsp;<BR>
    At&nbsp;March&nbsp;31,&nbsp;2017</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-decoration: underline; text-align: left; text-indent: -12pt; padding-left: 12pt">Tier 1 Leverage Ratio</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 48%; text-indent: -12pt; padding-left: 12pt">Bank</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">5.00</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">4.00</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">9.00</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">11.60</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-decoration: underline; text-align: left; text-indent: -12pt; padding-left: 12pt">Tier 1 Risk-based Capital Ratio</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -12pt; padding-left: 12pt">Bank</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8.00</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7.25</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11.00</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15.46</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-decoration: underline; text-align: left; text-indent: -12pt; padding-left: 12pt">Total Risk-based Capital Ratio</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -12pt; padding-left: 12pt">Bank</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10.00</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.25</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13.00</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16.59</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -12pt; padding-left: 12pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-decoration: underline; text-align: left; text-indent: -12pt; padding-left: 12pt">Common Equity Tier 1 Capital Ratio</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -12pt; padding-left: 12pt">Bank</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6.50</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5.75</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&#9;N/A</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15.46</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">&ldquo;Well&nbsp;Capitalized&rdquo;</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Actual<BR>
    At&nbsp;December 31, 2016</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Actual&nbsp;<BR>
At&nbsp;December
    31, 2015</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-decoration: underline; text-align: left; text-indent: -12pt; padding-left: 12pt">Tier 1 Leverage Ratio</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 61%; text-indent: -12pt; padding-left: 12pt">Bank</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">5.00</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">11.63</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">11.90</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-decoration: underline; text-align: left; text-indent: -12pt; padding-left: 12pt">Tier 1 Risk-based Capital Ratio</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -12pt; padding-left: 12pt">Bank</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8.00</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16.09</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15.91</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-decoration: underline; text-align: left; text-indent: -12pt; padding-left: 12pt">Total Risk-based Capital Ratio</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -12pt; padding-left: 12pt">Bank</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10.00</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17.25</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17.06</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -12pt; padding-left: 12pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-decoration: underline; text-align: left; text-indent: -12pt; padding-left: 12pt">Common Equity Tier 1 Capital Ratio</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -12pt; padding-left: 12pt">Bank</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6.50</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16.09</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15.91</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Basel III revised the capital adequacy requirements
and the Prompt Corrective Action Framework effective January 1, 2015 for Esquire Bank. When fully phased in on January 1, 2019,
the Basel Rules will require Esquire Bank to maintain a 2.5% &ldquo;capital conservation buffer&rdquo; on top of the minimum risk-weighted
asset ratios. The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions
with a (i) CET1 to risk-weighted assets, (ii) Tier 1 capital to risk-weighted assets or (iii) total capital to risk-weighted assets</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>


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    <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->67<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><A HREF="#TableOfContents">Table of Contents</A>&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">above the respective minimum but below the capital conservation
buffer will face constraints on dividends, equity repurchases and discretionary bonus payments to executive officers based on the
amount of the shortfall. The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level and
will increase by 0.625% on each subsequent January 1, until it reaches 2.5% on January 1, 2019.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Contractual Obligations and Off-Balance Sheet Arrangements </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Contractual Obligations. </I></B>In the
ordinary course of our operations, we enter into certain contractual obligations. The following table presents our contractual
obligations as of March 31, 2017 and December 31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP COLSPAN="21" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Contractual&nbsp;Maturities&nbsp;as&nbsp;of&nbsp;March&nbsp;31,&nbsp;2017</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Less&nbsp;Than&nbsp;One<BR>
    Year</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">More&nbsp;Than&nbsp;One<BR>
    Year&nbsp;Through<BR> Three&nbsp;Years</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">More&nbsp;Than&nbsp;Three<BR>
    Years&nbsp;Through&nbsp;Five<BR> Years</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Over&nbsp;Five<BR>
Years</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Total</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="18" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(In thousands)</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 35%; text-align: left">Operating lease obligations</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">480</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">792</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">833</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">2,117</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">4,222</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Time deposits</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">19,862</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,825</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">22,687</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">20,342</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,617</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">833</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,117</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">26,909</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP COLSPAN="21" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Contractual
    Maturities as of December 31, 2016</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Less
    Than One<BR> Year</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">More
    Than One<BR> Year Through<BR> Three Years</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">More
    Than Three<BR> Years Through<BR>
 Five Years</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Over
    Five<BR> Years</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Total</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="18" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(In thousands)</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 35%; text-align: left">Operating lease obligations&#9;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">489</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">796</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">828</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">2,222</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">4,335</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Time deposits&#9;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">22,335</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,620</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">23,955</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt">Total&#9;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">22,824</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,416</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">828</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,222</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">28,290</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Off-Balance Sheet Arrangements. </I></B>We
are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of
our customers. These financial instruments include commitments to extend credit, which involve elements of credit and interest
rate risk in excess of the amount recognized in the consolidated balance sheets. Our exposure to credit loss is represented by
the contractual amount of the instruments. We use the same credit policies in making commitments as we do for on-balance sheet
instruments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">For further information, see Note 11 of the
Notes to the December 31, 2016 Consolidated Financial Statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Effect of Inflation and Changing Prices </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The consolidated financial statements and related
financial data included in this prospectus have been prepared in accordance with generally accepted accounting principles in the
United States of America, which require the measurement of financial position and operating results in terms of historical dollars
without considering the change in the relative purchasing power of money over time due to inflation. The primary impact of inflation
on our operations is reflected in increased operating costs. Unlike most industrial companies, virtually all the assets and liabilities
of a financial institution are monetary in nature. As a result, interest rates generally have a more significant impact on a financial
institution&rsquo;s performance than do general levels of inflation. Interest rates do not necessarily move in the same direction
or to the same extent as the prices of goods and services.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><A NAME="a_010"></A>BUSINESS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Overview</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We are a bank holding company headquartered
in Jericho, New York and registered under the BHC Act. Through our wholly owned bank subsidiary, Esquire Bank, National Association,
we are a full service commercial bank dedicated to serving the financial needs of the legal and small business communities on a
national basis, as well as commercial and retail customers in the New York metropolitan market. We offer tailored products and
solutions to the legal community and their clients as well as dynamic and flexible merchant services solutions to small business
owners, both on a national basis. We also offer traditional banking products for businesses and consumers in our local market area
(a subset of the New York metropolitan market). We believe these activities, primarily anchored by our legal community focus, generate
a stable source of low cost core deposits and a diverse asset base to support our overall operations. Our commercial and consumer
loans tailored to the litigation market enhance our overall yield on our loan portfolio, enabling us to earn attractive risk-adjusted
net interest margins. Additionally, our merchant processing activities generate a relatively stable source of fee income. We believe
our unique and dynamic business model distinguishes us from other banks and non-bank financial services companies in the markets
in which we operate as demonstrated by comparing our performance metrics for the three months ended March 31, 2017 and 2016 as
well as our year ended 2016 and 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">For the three months ended March 31, 2017 and
2016:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Our net income increased 26.8% to $815,000 or $0.16 per diluted share.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">We had a net interest margin of 4.23%, stabilized by a low cost of
funds of 0.15% on our core deposits.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Our loans increased 23.0%, or $54.3 million, to $290.6 million, with
no non-performing loans and solid asset quality metrics.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Our noninterest income increased 22.0% to $1.2 million, which represented
21.9% of our total revenue for the three months ended March 31, 2017, primarily driven by our merchant services platform.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">As of March 31, 2017, our total assets, loans, deposits and stockholders&rsquo;
equity totaled $438.1 million, $290.6 million, $383.4 million and $53.2 million, respectively.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">For the years ended December 31, 2016 and 2015:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Our net income increased 140.8% to $2.8 million or $0.55 per diluted
share.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">We had a net interest margin of 4.25%, an increase from 3.74%, stabilized
by a low cost of funds of 0.16% on our core deposits.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Our loans increased 24.1%, or $54.1 million, to $278.6 million, with
no non-performing loans and solid asset quality metrics.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Our noninterest income increased 40.2% to $4.1 million, which represented
20.9% of our total revenue at December 31, 2016, primarily driven by our merchant services platform.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">As of December 31, 2016, our total assets, loans, deposits and stockholders&rsquo;
equity totaled $424.8 million, $278.6 million, $370.8 million and $52.2 million, respectively.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Both 2015 and 2016 were transformational years
for the Company due in part to the successful execution of our unique and dynamic business model. We believe our ongoing commitment
to the litigation and small business communities have been, and should continue to be, the foundation for our success. In August
2015, we closed our private placement offering of our common stock and preferred stock that began in 2014, raising net proceeds
of $17.2 million and successfully converted Esquire Financial Holdings, Inc. and Esquire Bank from a savings and loan holding company
and savings bank to a bank holding company and national bank, respectively. We believe that the</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">additional capital, coupled with the conversion to a national bank,
has and should continue to enhance our commercial loan growth in the legal industry and business communities we serve.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We remain true to our commitment to serve the
litigation community and our commercial customers through our tailored and innovative products and solutions. We believe Esquire
Bank&rsquo;s approach to the legal community is simple yet effective <I>&ndash; </I>we listen to the customer&rsquo;s needs and
tailor products and services around those needs. Our management team includes attorneys and bankers who have serviced the legal
community throughout their careers, which is a differentiating factor and key to our robust attorney network. This model continues
to set us apart from other institutions that offer a &ldquo;one product fits all&rdquo; model. Our relationships within the litigation
community are a key contributor to our loan growth, strong loan yields, and low cost core deposits. The litigation community represented
more than 70% of our deposit base at March 31, 2017. In addition to our lending activities, we have also remained steadfast in
growing our merchant services platform. We provide dynamic and flexible merchant services solutions to small business owners. Our
merchant services platform has grown to approximately 13,000 small businesses at March 31, 2017, which generated most of our noninterest
income and represented 21.9% of our revenue for the three months ended March 31, 2017 and 20.9% of our revenue for the year ended
December 31, 2016. We believe merchant services represents a significant opportunity for future growth in fee income, core deposits
and enhanced lending opportunities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our low cost core deposits (deposits, excluding
time deposits), representing our primary funding source for loan growth, totaled $360.7 million at March 31, 2017 resulting in
a total cost of funds of 0.15%. These stable low cost funds are driven by our attorney operating and escrow deposits, representing
more than 70% of our total deposit base at March 31, 2017. We intend to continue to prudently manage growth in deposits, utilizing
customer sweep programs for our mass tort and class action business banking programs. We do not have traditional &ldquo;brick and
mortar&rdquo; branches to support our deposit growth. Instead, we rely on our robust attorney network to gather deposits and our
customers utilize on-line cash management technology to manage their operating and escrow accounts as well as their business banking
needs across the country. We believe the lack of branch infrastructure coupled with our strong net interest margin and growth will
continue to drive our efficiency ratio below the 73% reported for the three months ended March 31, 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">With
a growing and generally unseasoned loan portfolio, our credit risk may continue to increase and our future performance could be
adversely affected; however, we have invested in and developed underwriting and credit management processes tailored to each of
the products we offer in order to minimize these risks. We are committed to continuing to invest in and develop our underwriting
and credit management processes to ensure our asset quality remains high and we minimize our credit risk. At March 31, 2017, the
average age of our loan portfolio was 2.10 years and we currently do not have any non-performing loans. See &ldquo;Risk Factors&mdash;Our
loan portfolio is unseasoned,&rdquo; beginning on page 17.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Esquire Bank was originally chartered in 2006.
Esquire Financial Holdings, Inc. became our holding company in 2010. Our principal executive offices are located at 100 Jericho
Quadrangle, Suite 100, Jericho, New York 11753, and our telephone number at that address is (800) 996-0213.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Our Business Strategy</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Esquire Bank has positioned itself as a unique
provider of financial services and products to the legal community, developing a strong brand and reputation with attorneys and
their firms. The legal community we serve consists of law firms that litigate mass torts, class actions, commercial, employment,
product liability, personal injury and other litigation cases, as well as individual attorneys and their clients (plaintiffs involved
in the litigation who are the recipients of the settlements or judgments). According to the Towers Watson 2011 Update on U.S. Tort
Cost Trends, the U.S. tort system paid out $264.6 billion in commercial and personal tort costs in 2010. The same report states
that &ldquo;since 1950, growth in tort costs [commercial and personal] has exceeded growth in GDP by an average of approximately
two percentage points.&rdquo; However, tort cost growth has generally lagged GDP growth in the last five years covered by the Towers
Watson report and the Company has not conducted any independent research to determine if the value of tort actions in 2010 remains
indicative of the value of tort actions in 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Law firms are typically compensated on a contingent
basis based on a percentage of the gross settlement amounts, ranging from 20%-40% of the gross settlement. This market has traditionally
been fragmented with deposit services offered by banks and lending services offered by finance companies (non-FDIC insured entities).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Since commencing operations, we have leveraged
the strong business relationships that our founders, directors, stockholders, customers and managers have in the legal community,
creating a unique distribution network. We have had certain informal affiliations with numerous national and state trial associations,
including but not limited to the American Association of Justice (AAJ), the New York State Trial Lawyers Association (NYSTLA),
the Consumer Attorneys of California (CAOC), the Florida Association of Justice (FAJ) and the Pennsylvania Association for Justice
(PAJ). These organizations represent licensed trial attorneys across their states and nationwide. These informal affiliations,
coupled with our strong business relationships, should help to raise awareness of Esquire Bank&rsquo;s products and services throughout
the legal community. Our goal is to position Esquire Bank as the premier &ldquo;one stop&rdquo; financial services firm for the
legal community. We believe we are one of the few banks in the United States that specifically supports and has the expertise to
understand the specialized financial services needs of this legal community, and have developed commercial and consumer loan products
and services to meet these needs. We provide specialized lending and depository services to participants in the litigation industry
on a national basis, including:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Plaintiff law firms - single event, mass tort, class action and worker&rsquo;s compensation firms.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Non-bank trustees - claims administrators, third party administrators and lien resolution firms administering mass tort or
class action settlements on behalf of the courts, court orders, plaintiff and/or defendant counsel.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Consumers - claimants in single event, mass tort and class action lawsuits as well as employees and partners of the law firms.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In addition to our lending capabilities, in
2012 we entered into the merchant services business as an acquiring bank and hired a senior manager with over 35 years of experience
to lead that business. As a Visa and MasterCard member, we provide merchant services for small businesses located throughout the
United States through relationships with third party ISOs. ISOs provide a source of protection against merchant losses through
contractual liability for the acts and omissions of the merchants. These liabilities can be satisfied from ISO and/or merchant
reserves and monthly residual payments due to the ISO that are maintained at Esquire Bank. To date, Esquire Bank has not incurred
any losses from its merchant services activities. We entered into the merchant processing business to diversify and strengthen
our revenue stream by increasing noninterest income and to provide cross selling opportunities for other business banking products
and services. For the three months ended March 31, 2017, merchant processing revenues were approximately $838,000 million representing
most of our noninterest income, which was 21.9% of our total revenue. For the year ended December 31, 2016, merchant processing
revenues were approximately $2.9 million representing most of our noninterest income, which was 20.9% of our total revenue. At
March 31, 2017, we serviced approximately 13,000 small businesses, and for the three months ended March 31, 2017, we processed
$787.7 million in card volume. We intend to continue to expand our merchant processing business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Finally, we offer traditional commercial and
consumer lending and depository products in the New York metropolitan area with a focus on commercial, commercial real estate,
multifamily and 1-4 family residential loans. We control credit risk through both disciplined underwriting as well as active credit
management processes and procedures.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Lending Activities</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our strategy is to maintain a loan portfolio
that is broadly diversified by type and location. Within this general strategy, we intend to focus our growth in Attorney-Related
Loans, which include commercial and consumer lending to attorneys, law firms and plaintiffs/claimants where we have expertise
and market insights. As of March 31, 2017, these product lines in aggregate totaled $106.4 million (or 36.8% of our loan portfolio).
As of March 31, 2017, our Commercial Attorney-Related Loans, which consist of working capital lines of credit, case cost lines
of credit, term loans and post-settlement commercial and other commercial attorney-related loans, totaled $101.2 million, or 95.1%
of our total attorney-related loan portfolio and 35.0% of our loan portfolio. As of March 31, 2017, our</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0in">Consumer Attorney-Related
Loans, which consist of post-settlement consumer loans and structured settlement loans, totaled $5.3 million, or 4.9% of our total
Attorney-Related Loan portfolio and 1.8% of our loan portfolio. With respect to our Attorney-Related Loan portfolio, we seek out
customers on a nationwide basis.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following table sets forth the composition
of our Attorney-Related Loan portfolio by type of loan at the dates indicated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

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<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">March
    31, 2017</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">December
    31, 2016</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">December
    31, 2015</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amount</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amount</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Amount</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="22" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Dollars in thousands)</FONT></TD><TD STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Attorney-Related Loans</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Commercial Attorney-Related:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 22%; text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Working capital lines of credit</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">68,985</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">68.17</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">63,251</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">66.61</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">51,433</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">66.64</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Case cost lines of credit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21,692</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21.44</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21,132</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22.26</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17,574</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22.77</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Term loans</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,571</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.46</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,675</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10.19</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,358</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.53</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 16.2pt">Post-settlement commercial and other commercial attorney-related loans</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">946</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.93</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">894</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.94</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">819</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1.06</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Total Commercial Attorney-Related</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">101,194</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100.00</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">94,952</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100.00</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">77,184</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100.00</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Consumer Attorney-Related:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Post-settlement consumer loans</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,703</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">70.47</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,078</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">65.35</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,653</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">78.44</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 16.2pt">Structured settlement loans</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,552</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">29.53</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,632</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">34.65</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,829</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">21.56</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Total Consumer Attorney-Related</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,255</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">100.00</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,710</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">100.00</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">8,482</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">100.00</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Total Attorney-Related Loans</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">106,449</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100.00</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">99,662</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100.00</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">85,666</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100.00</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">At March 31, 2017, approximately 56% of the
total Attorney-Related Loans outstanding had been extended to customers in New York followed by 13% extended to customers in Texas.
Our current Loan Policy limits the percentage of out-of-state loans to 25% per loan type in any one state other than New York.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">As of March 31, 2017, our total real estate
loans, which consist of 1-4 family loans, commercial real estate loans, multifamily loans and construction loans, totaled $165.6
million (or 57.2% of our loan portfolio). The majority of our real estate secured loans are in the areas surrounding the New York
metropolitan area. We anticipate continuing to focus on the commercial and personal credit needs of businesses and individuals
in these markets.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following is a discussion of our major types
of lending activity:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Commercial Loans and Lines of Credit (&ldquo;Commercial&rdquo;).
</I></B>Commercial loans are originated to local small to mid-size businesses to provide short-term financing for inventory, receivables,
the purchase of supplies, or other operating needs arising during the normal course of business and loans made to our qualified
merchant customers. In addition, specialized and tailored commercial loans are offered to attorneys and law firms nationally. At
March 31, 2017, commercial loans (excluding Commercial Attorney-Related Loans of $101.2 million) totaled $11.6 million (or 4.0%
of total loans). All commercial loans are originated internally and represented 39.0% of our total loans at March 31, 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><I>Commercial Attorney-Related Loans. </I>The
following is a summary of the specialized commercial loan products we offer to meet the needs of the litigation community. Commercial
Attorney-Related Loans are made to attorneys and law firms and the outstanding loan balances are included in the loan balance for
commercial loans as noted above. A unique aspect of our underwriting involves advances of loan proceeds against a &ldquo;borrowing
base,&rdquo; which typically consists of the inventory of litigation cases for the firm. We complement this with traditional commercial
underwriting. See &ldquo;&mdash;Credit Risk Management&rdquo; below. Generally, the maximum amount a customer may borrow at any
time is fixed as a percentage of the borrowing base outstanding at any time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD><I><U>Working Capital Lines of Credit (&ldquo;WC LoC&rdquo;).</U><B> </B></I>WC LoCs are unsecured business lines of credit
offered to law firms for general corporate purposes, including meeting cash flow needs, advertising, financing the purchase of
fixed assets, or other reasons. The balance of such loans was $69.0 million at March 31, 2017 (or 64.8% of total Attorney-Related
Loans).</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD><I><U>Case Cost Lines of Credit.</U><B> </B></I>Case Cost Lines of Credit (&ldquo;Case Cost LOC&rdquo;) are unsecured business
lines of credit that are tied to the costs of contingency cases and totaled $21.7 million at March 31,</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in">2017 (or 20.4% of total Attorney-Related Loans). Contingency
case costs include court filing fees, investigative costs, expert witness fees, deposition costs, and other costs. Recovery of
case costs is derived from gross settlement proceeds from the settled case. In our experience, an average case can take two to
four years to litigate and law firms are prevented from charging their clients any interest for the out-of-pocket litigation costs,
which amounts to an interest-free loan provided to the client. Thus, instead of using the law firm&rsquo;s cash flow, law firms
use Case Cost LOCs to finance litigation cash flows because the finance charges can be charged against the settlement proceeds.
Case Cost LOCs are not contingent loans, meaning that their repayment is not dependent on a favorable case settlement. In the event
of an unfavorable outcome for the borrower, the loans are repaid from the cash flows of the law firm.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD><I><U>Term Loans.</U><B> </B></I>Term loans are short-term unsecured business loans originated to law firms for general corporate
purposes such as the purchase of equipment or enhancing operational facilities. These loans are offered to law firms at the same
terms as those offered to other types of businesses. Term loans to law firms totaled $9.6 million at March 31, 2017 (or 9.0% of
total Attorney-Related Loans).</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD><I><U>Post-Settlement Commercial and Other Commercial Attorney-Related Loans.</U></I><B> </B>Post-settlement commercial loans
are bridge loans secured by proceeds from non-appealable, settled cases. Other commercial attorney-related loans<B> </B>consist
of both secured and unsecured loans to law firms and attorneys. Post-settlement commercial and other commercial attorney-related
loans totaled $950,000 at March 31, 2017 (or 0.9% of total Attorney-Related Loans).</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Consumer Loans. </I></B>Consumer loans<B><I>
</I></B>are primarily post-settlement consumer and structured settlement loans made to plaintiffs and claimants as described below.
Consumer loans are also originated to individuals for debt consolidation, home repairs, home improvement or major consumer purchases.
Consumer loans are both secured and unsecured. At March 31, 2017, total consumer loans were $11.0 million (or 3.8% of total loans).
We believe that our post-settlement consumer loans to claimants should increase based upon recent mass tort settlements including,
but not limited to, the World Trade Center Victims Compensation Fund (VCF), the NFL Concussion case (NFL) and Transvaginal Mesh
litigation matters (TVM).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following is a summary of the specialized
Consumer Attorney-Related Loan products we offer to meet the needs of the litigation market. Consumer Attorney-Related Loans, which
consist of post-settlement consumer and structured settlement loans, are consumer loans made to individual plaintiffs/claimants
and the outstanding loan balances are included in the loan balance for consumer loans as noted above.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD><I><U>Post-Settlement Consumer Loans.</U></I> Post-settlement consumer loans are generally bridge loans to individuals secured
by proceeds from settled cases. These loans generally meet the &ldquo;life needs&rdquo; of claimants in various litigation matters
due to the delay between the time of settlement and actual payment of the settlement. These delays are primarily due to various
administrative matters in the case. The balance of post-settlement consumer loans to individuals was $3.7 million at March 31,
2017.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Wingdings">&sect;</FONT></TD><TD><I><U>Structured Settlement Loans.</U></I> Structured settlement loans are structured such that the annuity provider (a highly
rated insurance company) is directed by the court, at the request of the borrower, to deposit the borrower&rsquo;s payments into
an account designated by us. Loan payments are then automatically deducted from the annuity payment. At March 31, 2017, structured
loans in our loan portfolio totaled $1.6 million.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Real Estate Loans. </I></B>The majority
of our real estate secured loans are in the areas surrounding the New York metropolitan area.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><I>&nbsp;</I></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><I>Multifamily.<B> </B></I>Multifamily loans
are the largest component of the real estate loan portfolio and totaled $92.8 million (or 32.0% of total loans) at March 31, 2017.
The multifamily loan portfolio consists of loans secured by apartment buildings and mixed-use buildings (predominantly residential
income producing) in our primary market area. We originate and purchase multifamily loans. Whether originated or purchased, all
loans are independently underwritten by Esquire Bank utilizing the same underwriting criteria and approved by the Directors Loan
Committee or in accordance with our Board established approval authorities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><I>1-4 Family Residential.<B> </B></I>Mortgage
loans are primarily secured by 1-4 family cash flowing investment properties ($47.6 million as of March 31, 2017) in our market
area. The residential mortgage loan portfolio includes 1-4 family investment properties, primary and secondary owner occupied residences,
investor coop and condos. The majority of residential mortgages are originated internally, although we do purchase residential
mortgages from time to time. Purchased loans are subject to all the asset quality and documentary precautions normally used when
originating a loan.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><I>Commercial Real Estate (&ldquo;CRE&rdquo;).</I>
CRE loans totaled $21.3 million (or 7.4% of total loans) at March 31, 2017 and consisted primarily of loans secured by hospitality
properties (53.1% of the CRE portfolio), mixed use properties (27.0% of the CRE portfolio) and warehouses (8.1% of the CRE portfolio),
with the remainder comprised of condo associations and office/retail properties. Owner-occupied loans represented 21.9% of the
CRE portfolio at March 31, 2017. We both originate and purchase CRE loans. All loans are independently underwritten by us utilizing
the same underwriting criteria, and approved by the Directors Loan Committee.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><I>Construction Loans.<B> </B></I> Construction
loans are originated on an opportunistic basis and totaled $4.1 million (or 1.4% of total loans) at March 31, 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Merchant Services Activities</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We provide merchant services as an acquiring
bank through the third-party or ISO business model in which we process credit and debit card transactions on behalf of merchants.
This model is designed to shift some of the risk from merchant losses resulting from chargebacks, fraud, non-compliance issues
or even insolvency to the ISO. In an ISO model, the bank and the ISO jointly enter into the merchant agreement with each merchant.
We believe that this model provides an added layer of protection against losses from merchants since losses that are not absorbed
by a merchant would be the liability of the ISO payable from reserves posted by the ISO or other funds the bank owes to the ISO.
Even with this recourse, Esquire Bank is ultimately liable for losses from actions of merchants and those of ISOs.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We entered into the merchant processing business
as an acquiring bank in 2012 in an effort to increase our noninterest income revenue and to provide cross selling opportunities
for other business banking products and services. For the three months ended March 31, 2017, merchant processing revenues were
approximately $838,000 and represented most of our noninterest income, which was 21.9% of our total revenue and represented an
increase of 11.3% over the three months ended March 31, 2016. For the year ended December 31, 2016, merchant processing revenues
were approximately $2.9 million and represented most of our noninterest income, which was 20.9% of our total revenue and represented
an increase of 33.5% over the comparable prior year period. At March 31, 2017, we had agreements with 17 ISOs, we serviced approximately
13,000 merchants, and for the three months ended March 31, 2017, we processed $787.7 million in card volume. We intend to continue
to expand our merchant processing business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Under the ISO model, Esquire Bank and the ISO
determine the appropriate amount of merchant reserves, which is generally based on the nature of the merchant&rsquo;s business,
its chargeback and refund history, processing volumes and the merchant&rsquo;s financial health. The ISO performs an underwriting
and risk management review, although Esquire Bank itself also reviews and underwrites every application and performs separate risk
monitoring and management to ensure conformance with Esquire Bank&rsquo;s internal underwriting policies. As of December 31, 2016,
we had contractual arrangements with three payment processors or clearing agents, TSYS, JetPay and TriSource, which are utilized
by Esquire Bank and our ISOs to authorize, process and obtain settlement for card transactions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We believe that the growth prospect in the U.S.
consumer payments processing market continues to be attractive. According to the Nilson Report, total estimated U.S. Visa, MasterCard,
Discover, PayPal and American</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Express (&ldquo;Card Brand&rdquo;) payment volume reached nearly
$5 trillion in 2015. U.S. consumer spending through electronic payment methods continues to be very strong. The Card Brand aggregate
volume has been consistently growing at a 9% CAGR for the past five years. We believe that this increase in volume is attributable
to electronic payments having multiple growth avenues, including, but not limited to, organic growth (inflation and GDP), increased
consumer usage and increased merchant acceptance. In the U.S., the top 100 merchants make up less than 3.5% of the merchant outlets
and less than 5% of the net revenue to merchant acquiring companies. Based upon the above information, we believe that our noninterest
income generated from merchant services has the potential for continued growth.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We have implemented a comprehensive risk mitigation
program for our merchant services business which includes detailed policies and procedures applicable to both ISOs and merchants
pertaining to due diligence, risk and underwriting and Bank Secrecy Act compliance, among other things. Our Merchant Acquiring
and Risk Policy establishes authorities and guidelines for the Bank to acquire merchant servicing arrangements with ISOs, agent
banks, direct merchants and through merchant portfolio acquisitions. Such guidelines include initial and ongoing due diligence
requirements and approval authorities. All merchants, regardless of how the merchant is acquired, must meet our Merchant Credit/Underwriting
Policy requirements. In addition, credit approval requirements and authorities for approving merchants and ISOs are clearly defined
in our Merchant Acquiring and Risk Policy.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our Merchant Acquiring and Risk Policy establishes
stringent requirements related to the due diligence conducted initially and on an ongoing basis, requirements for the ISO contract,
our responsibilities and the ISO&rsquo;s responsibilities in connection with the sponsorship and other matters. In the event of
a potential loss and in accordance with the terms of the ISO Merchant Agreement, we can take the following actions to collect:
charge the merchant account; charge the merchant reserve account; charge the ISO reserve account; deduct from the ISO monthly residual
on an ongoing basis until fully recovered; and recover through chargeback insurance, which is required for high-risk merchants.
As of March 31, 2017, we did not have any high-risk merchants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In exchange for the liabilities and costs assumed
by ISOs, we receive reduced revenue on our merchant servicing portfolio than direct merchant service providers that do not obtain
such indemnification and administrative support. For the year ended December 31, 2016, we received a blended rate of approximately
eight basis points for merchant processing, and for the three months ended March 31, 2017, we received a blended rate of approximately
ten basis points for merchant processing, compared to direct merchant service providers that may receive two to three times that
rate for a portfolio with similar risk characteristics. However, we believe that our acquiring bank model represents less risk
for Esquire Bank.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Deposit Funding</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Deposits are our primary source of funds to
support our earning assets and growth. We offer depository products, including checking, savings, money market and certificates
of deposit with a variety of rates. Deposits are insured by the FDIC up to statutory limits. Our unique low cost core deposit model
is primarily driven by escrow and operating accounts from law firms and other litigation settlements on a national basis, representing
more than 70% of $383.4 million in total deposits at March 31, 2017. Our core deposits (excluding time deposits) represent 94.1%
and our cost of funds on this stable funding source is 0.15%, anchored by our noninterest bearing demand deposits and attorney
escrow funds representing 34.8 and 37.6%, respectively, of total deposits. We require deposit balances associated with our commercial
loan arrangements and cash management relationships maintained by our commercial lending. We do not use traditional &ldquo;brick
and mortar&rdquo; branches to support our deposit growth and have only one branch, in Garden City, New York. The vast majority
of our customers utilize our on-line cash management technology to manage their operating and escrow accounts across the country.
The lack of a physical branch infrastructure and related costs coupled with our strong net interest margin, stable funding sources
and growth will continue to drive our efficiency ratio below the 73% reported at March 31, 2017. We continue to experience significant
growth in our mass tort business banking with off-balance sheet sweeps totaling $198.6 million at March 31, 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Deposits have traditionally been our primary
source of funds for use in lending and investment activities and we do not utilize borrowings as a significant funding source.
Besides generating deposits from law firms and litigation settlements, we also generate deposits from our merchant services platform
and other local businesses,</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">individuals through client referrals and other relationships and
through our single retail branch. We believe we have a very stable core deposit base due primarily to the litigation market strategy
as we strongly encourage and are successful in having law firm borrowers maintain their operating and escrow banking relationship
with us. Our low cost of funds is due to our deposit composition consisting of approximately 94.1% in transaction accounts at March
31, 2017. Our deposit strategy primarily focuses on developing borrowing and other service orientated relationships with customers
rather than competing with other institutions on rate. We have established deposit concentration thresholds to avoid the possibility
of dependence on any single depositor base for funds.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Our Competitive Strength</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We attribute our success to the following competitive
strengths:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Unique Distribution Network in Scalable
Industries. </I></B>We have developed a unique niche in the legal industry which represented $264.6 billion in commercial and personal
tort costs in 2010. We believe that our unique distribution network within the legal industry is derived from decades of experience
anchored by our founders, board of directors, stockholders, officers, customers and our affiliations with both state and national
trial associations. The legal community is our primary engine for current and future growth in low cost core deposits, commercial
loans and consumer loans. We believe the litigation industry has significant growth potential for us across the lending and depository
spectrum, as we represent a small portion of the total tort settlement market for each year that we have been in operations. While
we do face significant competition for Attorney-Related Loans, derived primarily from eight to ten nationally-oriented financial
companies that specialize in the litigation industry, we believe our knowledge of the litigation industry, our competitive rates
on loans and our ability to offer national, uniform deposit products, set us apart. Also, through our merchant services solutions
to small business owners, we processed approximately $3.6 billion in merchant transaction volume for the year ended December 31,
2016 and $787.7 million for the three months ended March 31, 2017. We believe we have the platform and the capacity to continue
to grow our merchant services business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Scalable Product Platforms Positioned
for Growth.</I></B> We have invested in people, processes and procedures in order to facilitate the recent growth in our key product
lines and position such product lines for additional growth in the future. We hired experienced management to establish unique
product lines, which have only recently become profitable on a run rate basis. We believe these unique product lines have significant
remaining growth potential. We also believe that the scalable platforms created by these investments position us for substantial
growth in our key product lines and have laid the groundwork for our ability to operate as a larger financial institution.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Diversified and Stable Business Model.</I></B>
The combination of our higher margin legal community focus for commercial banking (commercial loans, claimant/consumer loans and
core low cost deposits), fee-based small business focus in merchant services and our community banking focus in the New York metropolitan
area (commercial real estate and residential income producing lending) allows us to grow in varied economic conditions and business
cycles. Our merchant services platform is intended to provide a stable fee based income and a platform for small business loan
and deposit growth. Our New York metropolitan commercial real estate portfolio has historically provided a stable lending base
in our local market. Our commercial product lines enhance the overall yield of our loan portfolio and are offered on a nationwide
basis, helping us to mitigate our exposure to stagnant loan demand or yield compression in our community banking market. This model
also provides asset diversity and favorable cost of funds, especially when competing against the wholesale banks and non-bank finance
companies that offer similar commercial finance products. However, substantially all of our real estate loans and a majority of
our Attorney-Related Loans are concentrated in the New York metropolitan area and if negative economic conditions develop in the
United States as a whole or our New York market, we could experience higher delinquencies and loan charge-offs, which would reduce
our net income and adversely affect our financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Focused Risk Mitigation Practices.</I></B>
We have developed underwriting and credit management processes tailored to each of the products we offer, allowing us to construct
a diversified asset portfolio including specialized markets not typically served by community banks. We believe that our industry
experience and product knowledge has allowed us to develop processes, procedures and structural features in connection with offering
specialized products that enable us to appropriately identify and mitigate the risks associated with these products and services.
We</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">intend to increase our originations of commercial loans, including
working capital lines of credit, case cost lines of credit, term loans to law firms, and post-settlement commercial and other commercial
attorney-related loans and these loans generally have more risk than 1-4 family residential mortgage loans and commercial loans
secured by real estate. However, we are focused on continuing to invest in our risk mitigation practices and leveraging our product
knowledge to ensure we minimize these credit risks while we continue to grow our loan portfolio.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Experienced Management Team.</I></B> Our
leadership team consists of senior managers with an average of over 20 years of experience in the banking and non-banking financial
services industries. The majority of our senior managers come from multi-billion dollar financial institutions. We believe the
experience, relationships, and entrepreneurial culture of our management team as well as our Board of Directors have been and will
continue to be key drivers of our growth. Our key leadership team includes:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif"><U>Dennis Shields, Executive Chairman of the Board</U>. Mr. Shields
is the Executive Chairman of the Board of Directors and was a founding organizer of Esquire Bank. Since its inception in 2000,
Mr. Shields has also served as Chief Executive Officer of Plaintiff Funding Corp. (dba LawCash), a New York-based specialty finance
company that provides financial services products to law firms and claimants. Since 2014, Mr. Shields has served as the Chairman
at YieldStreet, an online platform for alternative investments and he is also the Chairman of Keeps America, a company that works
with law firms, disability advocates, and third-party administrators to distribute settlement awards and government benefits to
clients through its prepaid card. Mr. Shields served as a lay member of the Grievance Committee to the Second and Eleventh Judicial
Departments appointed by presiding judge from 1996 to 2004 and previously served on the New York State Health Information and Quality
Improvement Committee. Mr. Shields has authored two books and is a frequent speaker in both the legal and finance community. </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif"><U>Andrew C. Sagliocca, President, Chief Executive Officer and Director</U>.&nbsp;
Mr. Sagliocca served as the Company&rsquo;s Chief Financial Officer when he joined Esquire Bank in February 2007. He became the
Chief Executive Officer in January 2009. Prior to joining Esquire Bank, Mr. Sagliocca was Senior Vice President and Corporate Controller
of North Fork Bank from 1999 to 2007. Mr. Sagliocca has more than 27 years of experience in the financial services industry.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif"><U>Eric S. Bader, Executive Vice President, Chief Financial Officer
and Treasurer</U>.&nbsp; Prior to his appointment as Executive Vice President in February 2011, Mr. Bader served as our Senior
Vice President, Chief Financial Officer and Treasurer since January 2009. Prior to this, Mr. Bader served as Esquire Bank&rsquo;s
Senior Vice President and Treasurer, since joining Esquire Bank in January 2008.&nbsp; Prior to joining Esquire Bank, Mr. Bader
was Vice President at Goldman Sachs and served as a Vice President and Investment Officer at North Fork Bank.&nbsp; Mr. Bader has
17 years of experience in the financial services industry.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif"><U>Ari P. Kornhaber, Executive Vice President, Director of Sales</U>.
Mr. Kornhaber has served as Director of Sales at Esquire Bank since 2013. From 2004 to 2013, Mr. Kornhaber served as National Marketing
Director at Plaintiff Funding Holding, Inc. (dba LawCash). Mr. Kornhaber has spoken on the subject of financing for lawyers, law
firms and their clients, and the ethics surrounding the same, at numerous seminars and conferences across the United States for
over 10 years.&nbsp; After receiving his law degree from Touro Law School in New York, Mr. Kornhaber was a practicing plaintiff&rsquo;s
lawyer in New York City with the law firm of Pariser and Vogelman, PC and was a trial attorney for the law firm of Napoli, Kaiser
and Bern, LLC, where he specialized in personal injury, medical malpractice and mass tort litigation.&nbsp;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif"><U>Fred Horn, Senior Vice President, Director of Merchant Services</U>.
Mr. Horn joined Esquire Bank in 2012 to start up a merchant services program in order to generate processing&nbsp;fee income and
increase demand deposits.&nbsp; Prior to joining Esquire Bank, Mr. Horn was Senior Vice President at Merrick Bank for 11 years
where he started and directed a merchant service program which became the sixteenth largest such program in the country. Mr. Horn
served for 25 years at Summit Bank, Princeton, New Jersey (now Bank of America), where he held a number of senior officer positions
including directing merchant services, an American Express,
MasterCard and Visa credit card portfolio and a top 10 US Visa debit card program.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Our Growth Strategy</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We believe that our model of community banking
with a focus on niche commercial products and merchant services provides us with differentiated advantages when compared to our
competitors, including a strong deposit franchise, a more complete set of product offerings and the ability to earn attractive
risk-adjusted net interest margins. The pool of potential law firm customers is substantial, yet the specialized lending markets
that serve them remain highly fragmented. Many of our commercial loans are de novo products which we believe are poised to capture
additional market share as they mature. We will leverage our commercial law firm relationships to continue enhancing and grow
our claimant/consumer lending base, meeting the needs of the law firms&rsquo; customers. We expect to continue capturing market
share in the legal community because we provide both commercial and consumer clients with unique banking products and services.
Additionally, we plan to continue growing our merchant services platform for small businesses nationally, which we expect will
increase our fee income while offering lending and depository services to these businesses. Finally, we believe the lack of a
physical branch infrastructure and our strong balance sheet allows us to make investments in technology, personnel, marketing
and systems not available to non-bank commercial lenders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We market our loans along with other products
and services through a variety of channels. Fundamentally, we focus on a high-touch direct sales model, building long-term relationships
with our customers. Our sales officers actively solicit new and existing customers in the communities we serve. For our commercial
products, our sales personnel travel across the country to meet with our customers throughout the year. Importantly, while we seek
to ensure that the pricing on our loans products is competitive, we also attempt to distinguish ourselves on criteria other than
price, including service, industry knowledge and what we believe is a more complete value proposition than our competitors. We
believe that our suite of complementary commercial and consumer legal industry product options coupled with our on-line cash management
platform allows us to offer full-service banking relationships to customers and industries that have historically been served by
smaller non-bank commercial finance companies. It is our strategy to deepen our customer relationships and increase retention by
cross-marketing all of these products to our customers in an effort to be a &ldquo;one-stop&rdquo; financial services provider,
particularly in our legal industry niche.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Credit Risk Management</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We control credit risk both through disciplined
underwriting of each transaction, as well as active credit management processes and procedures to manage risk and minimize loss
throughout the life of a transaction. We seek to maintain a broadly diversified loan portfolio in terms of type of customer, type
of loan product, geographic area and industries in which our business customers are engaged. We have developed tailored underwriting
criteria and credit management processes for each of the various loan product types we offer our customers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Underwriting. </I></B>In evaluating each
potential loan relationship, we adhere to a disciplined underwriting evaluation process including but not limited to the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">understanding the customer&rsquo;s financial condition and ability
to repay the loan;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">verifying that the primary and secondary sources of repayment are
adequate in relation to the amount and structure of the loan;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">observing appropriate loan to value guidelines for collateral secured
loans;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">maintaining our targeted levels of diversification for the loan portfolio,
both as to type of borrower and geographic location of collateral; and</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">ensuring that each loan is properly documented with perfected liens
on collateral. </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Commercial Loans. </I></B>These loans
are typically made on the basis of the borrower&rsquo;s ability to make repayment from the cash flow of the borrower&rsquo;s business
and the collateral securing these loans may fluctuate in value.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Our commercial loans are originated based on the identified cash
flow of the borrower and on the underlying collateral provided by the borrower. Most often, this collateral consists of the case
inventory of the law firm (borrowing base) and, to a lesser extent, accounts receivable or equipment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><I><U>Commercial Attorney-Related Loans (working capital lines of credit, case cost lines of credit, and term loans).</U><B>
</B></I> We perform the underwriting criteria typical for commercial business loans (three years of tax returns, three years of
financial data, cash flows, partner guarantees, partner personal financials and credit history, background checks, etc.). We also
review the firm&rsquo;s case inventory to ascertain the value of their future receivables. Typically, at least three years of successful
experience in plaintiff practice are required. Working capital lines of credit and case cost lines of credit are floating rate,
prime-based loans. The proceeds of a Case Cost loan can only be used against case expenses. These loans are subject to a general
security agreement evidenced by UCC-1 filing on all assets of the borrower, including but not limited to case inventory, accounts
receivable, fixtures and deposits where applicable. A key component of the underwriting process is an evaluation of the pending
cases of an applicant law firm to determine the probability and amount of future settlements. These loans are based on a borrowing
base that was developed by us whereby a law firm&rsquo;s case inventory is segmented into various stages and evaluated.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Consumer Loans. </I></B>Consumer loans
primarily consist of our Consumer Attorney-Related Loans, which include post-settlement consumer loans and structured settlement
loans. Other consumer loans originated to individuals for debt consolidation, home repairs, home improvement or major consumer
purchases, are generally dependent on the credit quality of the individual borrower and may be secured or unsecured. To ensure
the value of the settlement amount and likelihood and timeframe of payout, we require an executed settlement agreement or an affidavit
of attorney attesting to the existence of an accepted offer. Post-settlement consumer loans are generally for one year terms with
extensions granted based on acceptable supporting documentation regarding case status and viability, at Esquire Bank&rsquo;s discretion.
Structured settlement loans are generally for terms of three, five or seven years. As the settlements are court ordered, the risks
of settlements being renegotiated after we have made the loans are minimal.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><I><U>Post-Settlement Consumer Loans.</U><B> </B></I> Post-settlement consumer loans are fully-secured by the proceeds from
the settlement and are generated from our internal sales force or from third party brokers. An executed settlement agreement is
a prerequisite for such loans, and the loan-to-value (&ldquo;LTV&rdquo;) ratio is generally limited to 50% of the net settlement
amount due to the borrower.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><I><U>Structured Settlement Loans.</U></I> Structured settlement loans are structured such that the annuity provider (a highly
rated insurance company) is directed by the court, at the request of the borrower, to deposit the borrower&rsquo;s payments into
an account designated by us. Loan payments are then automatically deducted from the annuity payment.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>1-4 Family Residential Loans.</I></B>
Residential mortgage loans are purchased or originated for both primary and secondary residences, generally with fixed rates and
30-year or 15-year terms. Adjustable-rate mortgages (&ldquo;ARMs&rdquo;) are purchased or originated as 1 year ARMs, 5/1 ARMs,
or 7/1 ARMs. We perform an extensive credit history review for each borrower. Second homes or investment properties are subject
to additional requirements. Debt-to-income (&ldquo;DTI&rdquo;) and debt service coverage, if applicable, ratios generally conform
to industry standards for conforming loans. Flood insurance, title insurance and fire/hazard insurance are mandatory for all applications,
as appropriate.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Commercial Real Estate and Multifamily
Loans. </I></B>Loans secured by commercial and multifamily real estate generally have larger balances and involve a greater degree
of risk than 1-4 family residential mortgage loans. Of primary concern in commercial and multifamily real estate lending is the
borrower&rsquo;s creditworthiness and the feasibility and cash flow potential of the project. Payments on loans secured by income
properties often depend on successful operation and management of the properties. As a result, repayment of such loans may be subject
to a greater extent than residential real estate loans, to adverse conditions in the real estate market or the economy.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In approving a commercial or multifamily
real estate loan, we consider and review a global cash flow analysis of the borrower and consider the net operating income of
the property, the borrower&rsquo;s expertise, credit history and profitability and the value of the underlying property.
Maximum LTV ratios are 80% of appraised value and we generally require that the properties securing these real estate loans
have minimum debt service ratios (the ratio of earnings before debt service to debt service) of 115%. Loan terms are fifteen
years or less with the option to extend another five years and amortization is based on a 25-30 year schedule or less. An
environmental phase one report is obtained when the possibility exists that hazardous materials may have existed on the site,
or the site may have been impacted by adjoining properties that handled hazardous materials. To monitor cash flows on income
properties, we require borrowers and loan guarantors, if any, to provide annual financial statements on commercial and
multifamily real estate loans.</P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Construction Loans. </I></B>Construction
lending involves additional risks when compared with permanent residential lending because funds are advanced upon the security
of the project, which is of uncertain value prior to its completion. This type of lending also typically involves higher loan principal
amounts and is often concentrated with a small number of builders. In addition, generally during the term of a construction loan,
interest may be funded by the borrower or disbursed from an interest reserve set aside from the construction loan budget. These
loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate
project and the ability of the borrower to sell or lease the property or obtain permanent take-out financing, rather than the ability
of the borrower or guarantor to repay principal and interest. Our construction loans are based upon estimates of costs and values
associated with the completed project. Underwriting is focused on the borrowers&rsquo; financial strength, credit history and demonstrated
ability to produce a quality product and effectively market and manage their operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Loan Approval Authority</I>. </B>Our lending
activities follow written, non-discriminatory, underwriting standards and loan origination procedures established by our Board
of Directors and management. We have established several levels of lending authority that have been delegated by the Board of Directors
to the Directors Loan Committee, the Chief Lending Officer and other personnel in accordance with the Lending Authority in the
Loan Policy. Authority limits are based on the total exposure of the borrower and are conditioned on the loan conforming to the
policies contained in the Loan Policy. Any Loan Policy exceptions are fully disclosed to the approving authority.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Loans to One Borrower. </I></B>In accordance
with loans-to-one-borrower regulations, the Bank is generally limited to lending no more than 15% of its unimpaired capital and
unimpaired surplus to any one borrower or borrowing entity. This limit may be increased by an additional 10% for loans secured
by readily marketable collateral having a market value, as determined by reliable and continuously available price quotations,
at least equal to the amount of funds outstanding. To qualify for this additional 10% the bank must perfect a security interest
in the collateral and the collateral must have a market value at all times of at least 100% of the loan amount that exceeds the
15% general limit. At March 31, 2017, our regulatory limit on loans-to-one borrower was $7.8 million.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Management understands the importance of concentration
risk and continuously monitors to ensure that portfolio risk is balanced between such factors as loan type, industry, geography,
collateral, structure, maturity and risk rating, among other things. Our Loan Policy establishes detailed concentration limits
and sub limits by loan type and geography.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Ongoing Credit Risk Management. </I></B>In
addition to the tailored underwriting process described above, we perform ongoing risk monitoring and review processes for all
credit exposures. Although we grade and classify our loans internally, we have an independent third party professional firm perform
regular loan reviews to confirm loan classifications. We strive to identify potential problem loans early in an effort to aggressively
seek resolution of these situations before the loans create a loss, record any necessary charge-offs promptly and maintain adequate
allowance levels for probable loan losses incurred in the loan portfolio.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In general, whenever a particular loan or overall
borrower relationship is downgraded to pass-watch or substandard based on one or more standard loan grading factors, our credit
officers engage in active evaluation of the asset to determine the appropriate resolution strategy. Management regularly reviews
the status of the watch list and classified assets portfolio as well as the larger credits in the portfolio.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In addition to our general credit risk management
processes, we employ additional risk management processes and procedures for our commercial loans to law firms. We require borrowing
base updates at least annually and also engage in active review and monitoring of the borrowing base collateral itself, including
field audits.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Investment Products. </I></B>We also offer
non-deposit investment products and related services through a third-party broker dealer, LPL Financial. Investment products and
services offered include investment analysis, mutual funds, annuities and life insurance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Investments</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We manage our investments primarily for liquidity
purposes, with a secondary focus on returns. Substantially all of our investments are classified as available-for-sale and can
be used to collateralize Federal Home Loan Bank of New York (FHLB) borrowings, FRB borrowings, public funds deposits or other borrowings.
At March 31, 2017, our investment portfolio had a fair value of $103.7 million, and consisted primarily of U.S. Government Agency
collateralized mortgage obligations and mortgage-backed securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our investment objectives are primarily to provide
and maintain liquidity, establish an acceptable level of interest rate risk, to provide a use of funds when demand for loans is
weak and to generate a favorable return. Our board of directors has the overall responsibility for the investment portfolio, including
approval of our investment policy. The Asset Liability Committee (ALCO) and management are responsible for implementation of the
investment policy and monitoring our investment performance. The Board of Directors reviews the status of our investment portfolio
monthly.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We have legal authority to invest in various
types of investment securities and liquid assets, including U.S. Treasury obligations, securities of various government-sponsored
enterprises, mortgage-backed securities and municipal governments, deposits at the FHLB, certificates of deposit of federally insured
institutions, investment grade corporate bonds and investment grade marketable equity securities, including money market mutual
funds. We also are required to maintain an investment in FHLB stock, which investment is based primarily on the level of our FHLB
borrowings. Additionally, we are required to maintain an investment in Federal Reserve Bank of New York stock equal to six percent
of our capital and surplus. While we have the authority under applicable law to invest in derivative securities, we had no investments
in derivative securities at March 31, 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Borrowings </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We maintain diverse funding sources including
borrowing lines at the FHLB, two commercial banks and the Federal Reserve Bank discount window. Although we do not utilize borrowings
as a significant funding source,<B><I> </I></B>we have from time to time utilized advances from the FHLB to supplement our supply
of investable funds. The FHLB functions as a central reserve bank providing credit for its member financial institutions. As a
member, we are required to own capital stock in the FHLB and are authorized to apply for advances on the security of such stock
and certain of our whole first mortgage loans and other assets (principally securities which are obligations of, or guaranteed
by, the United States), provided certain standards related to creditworthiness have been met. Advances are made under several different
programs, each having its own interest rate and range of maturities. Depending on the program, limitations on the amount of advances
are based either on a fixed percentage of an institution&rsquo;s net worth or on the Federal Home Loan Bank&rsquo;s assessment
of the institution&rsquo;s creditworthiness. As of March 31, 2017, we had $78.8 million of available borrowing capacity with the
FHLB. On that date, we had no advances outstanding from the FHLB. The other borrowing lines are maintained primarily for contingency
funding sources.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Competitors </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The bank and non-bank financial services industries
in our markets and surrounding areas is highly competitive. We compete with a wide range of regional and national banks located
in our market areas as well as non-bank commercial finance companies on a nationwide basis. We experience competition in both lending
and attracting funds as well as merchant processing services from commercial banks, savings associations, credit unions, consumer
finance companies, pension trusts, mutual funds, insurance companies, mortgage bankers and brokers, brokerage and investment banking
firms, non-bank lenders, government agencies and certain other non-financial institutions. Many of these competitors have more
assets, capital and lending limits, and resources than we do and may</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">be able to conduct more intensive and broader-based promotional
efforts to reach both commercial and individual customers. Competition for deposit products can depend heavily on pricing because
of the ease with which customers can transfer deposits from one institution to another.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We define the market area for legal community
products as law firms practicing within the United States, United States territories and United States commonwealths, and we serve
the litigation industry on a nationwide basis. For traditional community banking products and services, our primary market areas
are Nassau and New York (Manhattan) Counties in New York and secondarily throughout the state of New York.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Competition for Attorney-Related Loans is derived
primarily from eight to ten nationally-oriented financial companies that specialize in this market. Some of these companies are
focused exclusively on loans to law firms, while others offer loans to plaintiffs as well. While some overlap exists between the
litigation market loan products offered by Esquire Bank and these companies (primarily lines of credit, case-cost and post-settlement
commercial loans), there are a number of critical differences that management believes give Esquire Bank a competitive advantage:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Esquire Bank can offer more competitive rates on loans compared to
specialty finance companies because its cost of funds is much lower than the funding costs for these non-bank competitors. A number
of these companies purchase the settlements from law firms at steep discounts, which has drawn negative attention from some state
regulators. Esquire Bank does not purchase settlements, it uses them to collateralize loans;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">the non-bank companies are not able to offer deposit products or business
services such as remote deposit capture or letters of credit, or debit cards; and</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">non-banks cannot offer products uniformly across the country because
they are not national banks.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We have established our niche in the litigation
community, which, according to the Towers Watson 2011 Update on U.S. Tort Cost Trends, was an approximately $264.6 billion market
in the United States in 2010, through the strategic development of a business model that understands our market's unique needs
and provides access to our target customers. We have designed unique, value added products and services for our current and potential
clients and created a distribution network with direct access to the market through the experience and networks of our Board of
Directors, attorney stockholders, customers and management. A number of our directors, investors and customers are active members
of leading litigation law firms in the nation, national and state bar associations as well as other industry leading companies.
In addition, we have established relationships with key industry organizations such as the American Association for Justice, Mass
Tort Made Perfect, New York State Trial Lawyers Association, Consumer Attorneys of California, Florida Justice Association and
others, which we believe gives us access to thousands of trial attorneys across the United States.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our traditional community banking market area
has a diversified economy typical of most urban population centers, with the majority of employment provided by services, wholesale/retail
trade finance/insurance/real estate (&ldquo;FIRE&rdquo;) and construction. Services account for the largest employment sector across
the two primary market area counties, while wholesale/retail trade accounts for the second largest employment sector in Nassau
and New York Counties. New York City is one of the premier financial centers in the world, and thus FIRE is the third largest employment
sector in New York County.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Personnel </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">As of March 31, 2017, we had 50 full-time employees,
none of whom are represented by a collective bargaining unit. We believe we have a good working relationship with our employees.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Subsidiaries </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Esquire Bank, National Association is the sole
subsidiary of Esquire Financial Holdings, Inc. and there are no subsidiaries of Esquire Bank, National Association.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Legal Proceedings </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We are subject to certain pending and threatened
legal actions that arise out of the normal course of business. Management, following consultation with legal counsel, does not
expect the ultimate disposition of these matters to, individually or in the aggregate, have a material adverse effect on our business.
However, given the nature, scope and complexity of the extensive legal and regulatory landscape applicable to our business (including
laws and regulations governing consumer protection, fair lending, fair labor, privacy, employment, information security and anti-money
laundering and anti-terrorism laws), we, like all banking organizations, are subject to heightened legal and regulatory compliance
and litigation risk.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Properties </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">At March 31, 2017, we conducted business through
our corporate headquarters in Jericho, New York (Nassau County), and one administrative office in Palm Beach Gardens, Florida.
In November 2016, we completed construction of our new corporate headquarters facility in Jericho, New York. All the current locations
and our new headquarters are leased properties. Our lease for our new corporate headquarters is for a ten year term. At March 31,
2017, the total net book value of our leasehold improvements, furniture, fixtures and equipment was approximately $2.7 million.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We have no current plans to expand our branch
network as we believe we are positioned to further develop our primary markets through the use of technology with limited traditional
branch offices.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><A NAME="a_011"></A>SUPERVISION AND REGULATION&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>General&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Esquire Bank is a national bank organized under
the laws of the United States of America and its deposits are insured to applicable limits by the DIF. The lending, investment,
deposit-taking, and other business authority of Esquire Bank is governed primarily by federal law and regulations and Esquire Bank
is prohibited from engaging in any operations not authorized by such laws and regulations. Esquire Bank is subject to extensive
regulation, supervision and examination by, and the enforcement authority of, the OCC, and to a lesser extent by the FDIC, as its
deposit insurer, as well as by the FRB. Esquire Bank is also subject to federal financial consumer protection and fair lending
laws and regulations of the Consumer Financial Protection Bureau, though the OCC is responsible for examining and supervising the
bank&rsquo;s compliance with these laws. The regulatory structure establishes a comprehensive framework of activities in which
a national bank may engage and is primarily intended for the protection of depositors, customers and the DIF. The regulatory structure
gives the regulatory agencies extensive discretion in connection with their supervisory and enforcement activities and examination
policies, including policies with respect to the classification of assets and the establishment of adequate loan loss reserves
for regulatory purposes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Esquire Financial Holdings, Inc. is a bank holding
company, due to its control of Esquire Bank, and is therefore subject to the requirements of the Bank Holding Company Act of 1956,
as amended (&ldquo;BHCA&rdquo;), and regulation and supervision by the FRB. The Company files reports with and is subject to periodic
examination by the FRB.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Any change in the applicable laws and regulations,
whether by the OCC, the FDIC, the FRB or through legislation, could have a material adverse impact on Esquire Bank and the Company
and their operations and the Company&rsquo;s stockholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The Dodd-Frank Act made extensive changes in
the regulation of insured depository institutions. Among other things, the Dodd-Frank Act (i) created a new Consumer Financial
Protection Bureau as an independent bureau to assume responsibility for the implementation of the federal financial consumer protection
and fair lending laws and regulations, a function previously assigned to prudential regulators; (although institutions of less
than $10 billion in assets, such as Esquire Bank, continue to be examined for compliance with consumer protection and fair lending
laws and regulations by, and be subject to the primary enforcement authority of their primary federal bank regulator rather than
the Consumer Financial Protection Bureau); (ii) directed changes in the way that institutions are assessed for deposit insurance;
(iii) mandated the revision of regulatory capital requirements; (iv) codified the FRB&rsquo;s long-standing policy that a bank
holding company must serve as a source of financial and managerial strength for its subsidiary banks; (v) required regulations
requiring originators of certain securitized loans to retain a percentage of the risk for the transferred loans; (vi) stipulated
regulatory rate-setting for certain debit card interchange fees; (vii) repealed restrictions on the payment of interest on commercial
demand deposits; (viii) enacted the so-called Volcker Rule, which general prohibits banking organizations from engaging in proprietary
trading and from investing in, sponsoring or having certain relationships with hedge funds and (ix) contained a number of reforms
related to mortgage originations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Many of the provisions of the Dodd-Frank Act
had delayed effective dates and/or required the issuance of implementing regulations. The regulatory process is ongoing and the
impact on operations cannot yet be fully assessed. However, the Dodd-Frank Act has, and will likely continue to cause increased
regulatory burden, compliance costs and interest expense for the Company and Esquire Bank.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">What follows is a summary of some of the laws
and regulations applicable to Esquire Bank and Esquire Financial Holdings. The summary is not intended to be exhaustive and is
qualified in its entirety by reference to the actual laws and regulations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Esquire Bank, National Association</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Loans and Investments</B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">National banks have authority to originate and
purchase any type of loan, including commercial, commercial real estate, residential mortgages or consumer loans. Aggregate loans
by a national bank to any single borrower or group of related borrowers are generally limited to 15% of Esquire Bank&rsquo;s capital
and surplus, plus an additional 10% if secured by specified readily marketable collateral.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Federal law and OCC regulations limit Esquire
Bank&rsquo;s investment authority. Generally, a national bank is prohibited from investing in corporate equity securities for its
own account other than companies through which the bank conducts its business. Under OCC regulations, a national bank may invest
in investment securities up to specified limits depending upon the type of security. &ldquo;Investment securities&rdquo; are generally
defined as marketable obligations that are investment grade and not predominantly speculative in nature. The OCC classifies investment
securities into five different types and, depending on its type, a national bank may have the authority to deal in and underwrite
the security. The OCC has also permitted national banks to purchase certain noninvestment grade securities that can be reclassified
and underwritten as loans.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Lending Standards</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The federal banking agencies adopted uniform
regulations prescribing standards for extensions of credit that are secured by liens or interests in real estate or made for the
purpose of financing permanent improvements to real estate. Under these regulations, all insured depository institutions, such
as Esquire Bank, must adopt and maintain written policies establishing appropriate limits and standards for extensions of credit
that are secured by liens or interests in real estate or are made for the purpose of financing permanent improvements to real estate.
These policies must establish loan portfolio diversification standards, prudent underwriting standards (including loan-to-value
limits) that are clear and measurable, loan administration procedures, and documentation, approval and reporting requirements.
The real estate lending policies must reflect consideration of the federal bank regulators&rsquo; Interagency Guidelines for Real
Estate Lending Policies that have been adopted.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Federal Deposit Insurance</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Deposit accounts at Esquire Bank are insured
by the FDIC&rsquo;s DIF. Effective July 22, 2010, the Dodd-Frank Act permanently raised the deposit insurance available on all
deposit accounts to $250,000 with a retroactive effective date of January 1, 2008.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Under the FDIC&rsquo;s risk-based assessment
system, insured institutions were assigned a risk category based on supervisory evaluations, regulatory capital levels and certain
other factors. An institution&rsquo;s rate depended upon the category to which it is assigned, and certain adjustments specified
by FDIC regulations. Institutions deemed less risky pay FDIC assessments. The Dodd-Frank Act required the FDIC to revise its procedures
to base its assessments upon each insured institution&rsquo;s total assets less tangible equity instead of deposits. The FDIC finalized
a rule, effective April&nbsp;1, 2011, that set the assessment range at 2.5 to 45 basis points of total assets less tangible equity.
Effective July 1, 2016, the FDIC adopted changes that eliminated the risk categories and base assessments for most banks on financial
measures and supervisory ratings derived from statistical modeling estimating the probability of failure over three years. In conjunction
with the DIF reserve ratio achieving 1.5%, the assessment range (inclusive of possible adjustments) was also reduced for most banks
to 1.5 basis points to 30 basis points of total assets less tangible equity.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The FDIC may adjust its assessment scale uniformly,
except that no adjustment can deviate more than two basis points from the base scale without notice and comment. No insured institution
may pay a dividend if in default of the federal deposit insurance assessment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The FDIC may terminate deposit insurance upon
a finding that an institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations
or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC. We do not know of any practice, condition
or violation that might lead to termination of Esquire Bank&rsquo;s deposit insurance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In addition to the FDIC assessments, the Financing
Corporation (FICO) is authorized to impose and collect, through the FDIC as collection agent, assessments for anticipated payments,
issuance costs and custodial fees on bonds issued by the FICO in the 1980s to recapitalize the now defunct Federal Savings and
Loan Insurance</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Corporation. The bonds issued by the FICO are due to mature in 2017
through 2019. For the quarter ended December 31, 2016, the annualized FICO assessment was equal to 0.56 basis points of average
consolidated total assets less average tangible equity.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Capitalization</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Federal regulations require FDIC insured depository
institutions, including national banks, to meet several minimum capital standards: a common equity Tier 1 capital to risk-based
assets ratio, a Tier 1 capital to risk-based assets ratio, a total capital to risk-based assets and a Tier 1 capital to total assets
leverage ratio. The existing capital requirements were effective January 1, 2015 and are the result of a final rule implementing
regulatory amendments based on recommendations of the Basel Committee on Banking Supervision and certain requirements of the Dodd-Frank
Act.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The capital standards require the maintenance
of common equity Tier&nbsp;1 capital, Tier&nbsp;1 capital and total capital to risk-weighted assets of at least 4.5%, 6% and 8%,
respectively, and a leverage ratio of at least 4% Tier 1 capital. Common equity Tier&nbsp;1 capital is generally defined as common
stockholders&rsquo; equity and retained earnings. Tier 1 capital is generally defined as common equity Tier 1 and Additional Tier
1 capital. Additional Tier 1 capital generally includes certain noncumulative perpetual preferred stock and related surplus and
minority interests in equity accounts of consolidated subsidiaries. Total capital includes Tier 1 capital (common equity Tier 1
capital plus Additional Tier 1 capital) and Tier 2 capital. Tier 2 capital is comprised of capital instruments and related surplus
meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible
securities, intermediate preferred stock and subordinated debt. Also included in Tier 2 capital is the allowance for loan and lease
losses limited to a maximum of 1.25% of risk-weighted assets and, for institutions that have exercised an opt-out election regarding
the treatment of Accumulated Other Comprehensive Income (&ldquo;AOCI&rdquo;), up to 45% of net unrealized gains on available-for-sale
equity securities with readily determinable fair market values. Institutions that have not exercised the AOCI opt-out have AOCI
incorporated into common equity Tier 1 capital (including unrealized gains and losses on available-for-sale-securities). We exercised
the opt-out election regarding the treatment of AOCI. Calculation of all types of regulatory capital is subject to deductions and
adjustments specified in the regulations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In determining the amount of risk-weighted assets
for purposes of calculating risk-based capital ratios, a bank&rsquo;s assets, including certain off-balance sheet assets (e.g.,
recourse obligations, direct credit substitutes, residual interests), are multiplied by a risk weight factor assigned by the regulations
based on perceived risks inherent in the type of asset. Higher levels of capital are required for asset categories believed to
present greater risk. For example, a risk weight of 0% is assigned to cash and U.S. government securities, a risk weight of 50%
is generally assigned to prudently underwritten first lien 1-4 family residential mortgages, a risk weight of 100% is assigned
to commercial and consumer loans, a risk weight of 150% is assigned to certain past due loans and a risk weight of between 0% to
600% is assigned to permissible equity interests, depending on certain specified factors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In addition to establishing the minimum regulatory
capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management if the
institution does not hold a &ldquo;capital conservation buffer&rdquo; consisting of 2.5% of common equity Tier 1 capital to risk-weighted
assets above the amount necessary to meet its minimum risk-based capital requirements. The capital conservation buffer requirement
is being phased in beginning January 1, 2016 at 0.625% of risk-weighted assets and increasing each year until fully implemented
at 2.5% on January 1, 2019.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">On November 2, 2012, the OCC notified Esquire
Bank that it had established minimum capital ratios for Esquire Bank requiring Esquire Bank to maintain, commencing December
1, 2012, a Tier 1 leverage capital ratio of 9.0%, a Tier 1 risk-based capital ratio of 11.0% and a total risk-based capital to
risk-weighted assets ratio of 13.0%.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Safety and Soundness Standards</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Each federal banking agency, including the OCC, has adopted guidelines
establishing general standards relating to internal controls, information and internal audit systems, loan documentation, credit
underwriting, interest rate exposure, asset growth, asset quality, earnings, compensation, fees and benefits and information security
standards. In general, the guidelines require appropriate systems and practices to identify and manage the risks and exposures</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">specified in the guidelines. The guidelines prohibit excessive compensation
as an unsafe and unsound practice and describe compensation as excessive when the amounts paid are unreasonable or disproportionate
to the services performed by an executive officer, employee, director, or principal stockholder. The FDIC also has issued guidance
on risks banks may face from third party relationships (e.g. relationships under which the third party provides services to the
bank). The guidance generally requires the bank to perform adequate due diligence on the third party, appropriately document the
relationship, and perform adequate oversight and auditing, in order to the limit the risks to the bank.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Prompt Corrective Regulatory Action</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Federal law requires that federal bank regulatory
authorities take &ldquo;prompt corrective action&rdquo; with respect to institutions that do not meet minimum capital requirements.
For these purposes, the statute establishes five capital tiers: well capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized and critically undercapitalized.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">National banks that have insufficient capital
are subject to certain mandatory and discretionary supervisory measures. For example, a bank that is &ldquo;undercapitalized&rdquo;
(i.e. fails to comply with any regulatory capital requirement) is subject to growth limitations and is required to submit a capital
restoration plan; a holding company that controls such a bank is required to guarantee that the bank complies with the restoration
plan. A &ldquo;significantly undercapitalized&rdquo; bank is subject to additional restrictions. National banks deemed by the OCC
to be &ldquo;critically undercapitalized&rdquo; are subject to the appointment of a receiver or conservator.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The final rule that increased regulatory capital
standards also adjusted the prompt corrective action tiers as of January 1, 2015 to conform to the new capital standards. The various
categories now incorporate the newly adopted common equity Tier 1 capital requirement, an increase in the Tier 1 to risk-based
assets requirement and other changes. Under the revised prompt corrective action requirements, insured depository institutions
are required to meet the following in order to qualify as &ldquo;well capitalized:&rdquo; (1) a common equity Tier 1 risk-based
capital ratio of 6.5% (new standard); (2) a Tier 1 risk-based capital ratio of 8% (increased from 6%); (3) a total risk-based capital
ratio of 10% (unchanged) and (4) a Tier 1 leverage ratio of 5% (unchanged).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Dividends</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Under federal law and applicable regulations,
a national bank may generally declare a cash dividend, without approval from the OCC, in an amount equal to its year-to-date net
income plus the prior two years&rsquo; net income that is still available for cash dividend. Cash dividends exceeding those amounts
require application to and approval by the OCC. To pay a cash dividend, a national bank must also maintain an adequate capital
conservation buffer under the capital rules discussed above.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Transactions with Affiliates and Insiders</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Sections 23A and 23B of the Federal Reserve
Act govern transactions between a national bank and its affiliates, which includes the Company. The FRB has adopted Regulation
W, which implements and interprets Sections 23A and 23B, in part by codifying prior FRB interpretations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">An affiliate of a bank is any company or entity
that controls, is controlled by or is under common control with the bank. A subsidiary of a bank that is not also a depository
institution or a &ldquo;financial subsidiary&rdquo; under federal law is not treated as an affiliate of the bank for the purposes
of Sections 23A and 23B; however, the OCC has the discretion to treat subsidiaries of a bank as affiliates on a case-by-case basis.
Section 23A limits the extent to which a bank or its subsidiaries may engage in &ldquo;covered transactions&rdquo; with any one
affiliate to 10% of the bank&rsquo;s capital stock and surplus. There is an aggregate limit of 20% of the bank&rsquo;s capital
stock and surplus for such transactions with all affiliates. The term &ldquo;covered transaction&rdquo; includes, among other things,
the making of a loan to an affiliate, a purchase of assets from an affiliate, the issuance of a guarantee on behalf of an affiliate
and the acceptance of securities of an affiliate as collateral for a loan. All such transactions are required to be on terms and
conditions that are consistent with safe and sound banking practices and no transaction may involve the acquisition of any &ldquo;low
quality asset&rdquo; from an affiliate. Certain covered transactions, such as loans to or guarantees on behalf of an affiliate,
must be secured by collateral in amounts ranging from 100 to 130 percent of the loan amount, depending upon the type of</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">collateral. In addition, Section 23B requires that any covered transaction
(and specified other transactions) between a bank and an affiliate must be on terms and conditions that are substantially the same,
or at least as favorable, to the bank, as those that would be provided to a non-affiliate.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">A bank&rsquo;s loans to its executive officers,
directors, any owner of more than 10% of its stock (each, an &ldquo;insider&rdquo;) and certain entities affiliated with any such
person (an insider&rsquo;s &ldquo;related interest&rdquo;) are subject to the conditions and limitations imposed by Section 22(h)
of the Federal Reserve Act and the FRB&rsquo;s Regulation O. The aggregate amount of a bank&rsquo;s loans to any insider and the
insider&rsquo;s related interests may not exceed the loans-to-one-borrower limit applicable to national banks. Aggregate loans
by a bank to its insiders and insiders&rsquo; related interests may not exceed the bank&rsquo;s unimpaired capital and unimpaired
surplus. With certain exceptions, such as education loans and certain residential mortgages a bank&rsquo;s loans to its executive
officers, may not exceed the greater of $25,000 or 2.5% of the bank&rsquo;s unimpaired capital and unimpaired surplus, but in no
event more than $100,000. Regulation O also requires that any loan to an insider or a related interest of an insider be approved
in advance by a majority of the board of directors of the bank, with any interested director not participating in the voting, if
the loan, when aggregated with any existing loans to that insider or the insider&rsquo;s related interests, would exceed the lesser
or $500,000 or 5% of the bank&rsquo;s unimpaired capital and surplus. Generally, such loans must be made on substantially the same
terms as, and follow credit underwriting procedures that are no less stringent than, those that are prevailing at the time for
comparable transactions with other persons and must not present more than a normal risk of collectability. An exception is made
for extensions of credit made pursuant to a benefit or compensation plan of a bank that is widely available to employees of the
bank and that does not give any preference to insiders of the bank over other employees of the bank.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Enforcement</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The OCC has extensive enforcement authority
over national banks to correct unsafe or unsound practices and violations of law or regulation. Such authority includes the issuance
of cease and desist orders, assessment of civil money penalties and removal of officers and directors. The OCC may also appoint
conservator or receiver for a national bank under specified circumstances, such as where (i) the bank&rsquo;s assets are less than
its obligations to creditors, (ii) the bank is likely to be unable to pay its obligations or meet depositors&rsquo; demands in
the normal course of business or (iii) a substantial dissipation of bank assets or earnings has occurred due to a violation of
law of regulation or unsafe or unsound practices.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Federal Reserve System</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Under FRB regulations, Esquire Bank is required
to maintain reserves at the Federal Reserve Bank against its transaction accounts, including checking and NOW accounts. The regulations
currently require that reserves of 3% be maintained against aggregate transaction accounts over $15.5 million and 10% against that
portion of total transaction accounts in excess of $115.1 million. The first $15.5 million of otherwise reservable balances are
exempted from the reserve requirements. The Bank is in compliance with these requirements. The requirements are adjusted annually
by the FRB. The FRB began paying interest on reserves in 2008, currently 0.50%.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Examinations and Assessments</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Esquire Bank is required to file periodic reports
with and is subject to periodic examination by the OCC. Federal regulations generally require periodic on-site examinations for
all depository institutions. Esquire Bank is required to pay an annual assessment to the OCC to fund the agency&rsquo;s operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Community Reinvestment Act and Fair Lending Laws</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Under the CRA, Esquire Bank has a continuing
and affirmative obligation consistent with its safe and sound operation to help meet the credit needs of its entire community,
including low and moderate income neighborhoods. The CRA does not establish specific lending requirements or programs for financial
institutions nor does it limit an institution&rsquo;s discretion to develop the types of products and services that it believes
are best suited to its particular community. The CRA requires the OCC to assess its record of meeting the credit needs of its community
and to take that record into account in its evaluation of certain applications by Esquire Bank. For example, the regulations specify</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">that a bank&rsquo;s CRA performance will be considered in its expansion
(e.g., branching or merger) proposals and may be the basis for approving, denying or conditioning the approval of an application.
As of the date of its most recent OCC evaluation, Esquire Bank was rated &ldquo;satisfactory&rdquo; with respect to its CRA compliance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>USA PATRIOT Act and Money Laundering</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Esquire Bank is subject
to the federal Bank Secrecy Act (the &ldquo;BSA&rdquo;), which incorporates several laws, including the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, or the USA PATRIOT Act and related
regulations. The USA PATRIOT Act gives the federal government powers to address money laundering and terrorist threats through
enhanced domestic security measures, expanded surveillance powers, increased information sharing, and broadened anti-money laundering
requirements. By way of amendments to the Bank Secrecy Act, Title&nbsp;III of the USA PATRIOT Act implemented measures intended
to encourage information sharing among bank regulatory agencies and law enforcement bodies. Further, certain provisions of Title&nbsp;III
impose affirmative obligations on a broad range of financial institutions, including banks, thrifts, brokers, dealers, credit unions,
money transfer agents and parties registered under the Commodity Exchange Act.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Among other things, Title&nbsp;III
of the USA PATRIOT Act and the related regulations require:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Establishment of anti-money laundering
compliance programs that includes policies, procedures, and internal controls; the appointment of an anti-money laundering compliance
officer; a training program; and independent testing;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Filing of certain reports to FinCEN and
law enforcement that are designated to assist in the detection and prevention of money laundering and terrorist financing activities;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Establishment of a program specifying
procedures for obtaining and maintaining certain records from customers seeking to open new accounts, including verifying the identity
of customers;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">In certain circumstances, compliance with
enhanced due diligence policies, procedures and controls designed to detect and report money-laundering, terrorist financing and
other suspicious activity;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Monitoring account activity for suspicious transactions; and</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">A heightened level of review for certain high risk customers or accounts.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The USA PATRIOT Act also
includes prohibitions on correspondent accounts for foreign shell banks and requires compliance with record keeping obligations
with respect to correspondent accounts of foreign banks.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The bank regulatory agencies have increased
the regulatory scrutiny of the Bank Secrecy Act and anti-money laundering programs maintained by financial institutions. Significant
penalties and fines, as well as other supervisory orders may be imposed on a financial institution for non-compliance with these
requirements. In addition, the federal bank regulatory agencies must consider the effectiveness of financial institutions engaging
in a merger transaction in combating money laundering activities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Esquire Bank has adopted
policies and procedures to comply with these requirements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Privacy Laws</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Esquire Bank is subject to a variety of
federal and state privacy laws, which govern the collection, safeguarding, sharing and use of customer information. For
example, the Gramm-Leach-Bliley Act requires all financial institutions offering financial products or services to retail
customers to provide such customers with the financial institution&rsquo;s privacy policy and provide such customers the
opportunity to &ldquo;opt out&rdquo; of the sharing of certain personal financial information with unaffiliated third
parties. It also requires banks to safeguard personal information of consumer customers. Some state laws also protect the privacy
of information of state residents and require adequate security for such data.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Merchant Services</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Esquire Bank is also subject to the rules of
Visa, MasterCard and other payment networks in which it participates. If Esquire Bank fails to comply with such rules, the networks
could impose fines or require us to stop providing merchant services for cards under such network&rsquo;s brand or routed through
such network.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Other Regulations</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Esquire Bank&rsquo;s operations are also subject
to federal laws applicable to credit transactions, such as:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">The Truth-In-Lending Act, governing disclosures of credit terms to
consumer borrowers;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">The Real Estate Settlement Procedures Act, requiring that borrowers
for mortgage loans for 1-4 family residential real estate receive various disclosures, including good faith estimates of settlement
costs, lender servicing and escrow account practices, and prohibiting certain practices that increase the cost of settlement services;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">The Home Mortgage Disclosure Act, requiring financial institutions
to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its
obligation to help meet the housing needs of the community it serves;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">The Equal Credit Opportunity Act and other fair lending laws, prohibiting
discrimination on the basis of race, religion, sex and other prohibited factors in extending credit;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">The Fair Credit Reporting Act, governing the use of credit reports
on consumers and the provision of information to credit reporting agencies;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Unfair or Deceptive Acts or Practices laws and regulations;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">The Fair Debt Collection Act, governing the manner in which consumer
debts may be collected by collection agencies; and</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">The rules and regulations of the various federal agencies charged
with the responsibility of implementing such federal laws.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The operations of Esquire Bank are further subject
to the:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">The Truth in Savings Act, which specifies disclosure requirements
with respect to deposit accounts;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">The Right to Financial Privacy Act, which imposes a duty to maintain
confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial
records;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">The Electronic Funds Transfer Act and Regulation E promulgated thereunder,
which govern automatic deposits to and withdrawals from deposit accounts and customers&rsquo; rights and liabilities arising from
the use of automated teller machines and other electronic banking services; and</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">The Check Clearing for the 21<SUP>st</SUP> Century Act (also known
as &ldquo;Check 21&rdquo;), which gives &ldquo;substitute checks,&rdquo; such as digital check images and copies made from that
image, the same legal standing as the original paper check.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Holding Company Regulation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The Company, as a bank holding company controlling
Esquire Bank, is subject to regulation and supervision by the FRB under the BHCA. The Company is periodically examined by, required
to submit reports to the FRB and is required to comply with the FRB&rsquo;s rules and regulations. Among other things, the FRB
has authority to restrict activities by a bank holding company that are deemed to pose a serious risk to the subsidiary bank.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The FRB has historically imposed consolidated
capital adequacy guidelines for bank holding structured similar, but not identical, to those of the OCC for national banks. The
Dodd-Frank Act directed the FRB to issue consolidated capital requirements for depository institution holding companies that are
no less stringent, both quantitatively and in terms of components of capital, than those applicable to institutions themselves.
The previously discussed final rule regarding regulatory capital requirements implemented the Dodd-Frank Act as to bank holding
company capital standards. Consolidated regulatory capital requirements identical to those applicable to the subsidiary banks applied
to bank holding companies as of January 1, 2015. However, the FRB exempts from the consolidated capital requirements bank holding
companies with less than $1 billion in assets, unless otherwise directed in specific cases. Consequently, the Company is not currently
subject to the consolidated holding company capital requirements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The policy of the FRB is that a bank holding
company must serve as a source of financial and managerial strength to its subsidiary banks by providing capital and other support
in times of distress. The Dodd-Frank Act codified the source of strength policy.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Under the prompt corrective action provisions
of federal law, a bank holding company parent of an undercapitalized subsidiary bank is required to guarantee, within specified
limits, the capital restoration plan that is required of an undercapitalized bank. If an undercapitalized bank fails to file an
acceptable capital restoration plan or fails to implement an accepted plan, the FRB may prohibit the bank holding company parent
of the undercapitalized bank from paying dividends or making any other capital distribution.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">As a bank holding company, the Company is required
to obtain the prior approval of the FRB to acquire more than 5% of a class of voting securities of any additional bank or bank
holding company or to acquire all or substantially all, the assets of any additional bank or bank holding company. In evaluating
acquisition application, the FRB evaluates factors such as the financial condition, management resources and future prospects of
the parties, the convenience and needs of the communities involved and competitive factors. In addition, bank holding companies
may generally only engage in activities that are closely related to banking as determined by the FRB. Bank holding companies that
meet certain criteria may opt to become a financial holding company and thereby engage in a broader array of financial activities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">FRB policy is that a bank holding company should
pay cash dividends only to the extent that the company&rsquo;s net income for the past two years is sufficient to fund the dividends
and the prospective rate of earnings retention is consistent with the company&rsquo;s capital needs, asset quality and overall
financial condition. In addition, FRB guidance sets forth the supervisory expectation that bank holding companies will inform and
consult with Federal Reserve Bank staff in advance of issuing a cash dividend that exceeds earnings for the quarter and should
inform the Federal Reserve Bank and should eliminate, defer or significantly reduce dividends if (i) net income available to stockholders
for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends,
(ii) prospective rate of earnings retention is not consistent with the bank holding company's capital needs and overall current
and prospective financial condition, or (iii) the bank holding company will not meet, or is in danger of not meeting, its minimum
regulatory capital adequacy ratios.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">A bank holding company is required to give the
FRB prior written notice of any repurchase or redemption of its outstanding equity securities if the gross consideration for repurchase
or redemption, when combined with the net consideration paid for all such repurchases or redemptions during the preceding 12&nbsp;months,
will be equal to 10% or more of the company&rsquo;s consolidated net worth. The FRB may disapprove such a repurchase or redemption
if it determines that the proposal would constitute an unsafe and unsound practice or violate a law or regulation. Such notice
and approval is not required for a bank holding company that meets certain qualitative criteria. However, FRB guidance generally
provides for bank holding company consultation with Federal Reserve Bank staff prior to engaging in a repurchase or redemption of a bank holding company&rsquo;s
stock, regardless of whether a formal written notice is required.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The above FRB requirements may restrict a bank
holding company&rsquo;s ability to pay dividends to stockholders or engage in repurchases or redemptions of its shares.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><B><I>Acquisition of Control
of the Company.</I></B> Under the Change in Bank Control Act, no person may acquire control of a bank holding company such as the
Company unless the FRB has been prior written notice and has not issued a notice disapproving the proposed acquisition. In evaluating
such notices, the FRB takes into consideration such factors as the financial resources, competence, experience and integrity of
the acquirer, the future prospects the bank holding company involved and its subsidiary bank and the competitive effects of the
acquisition.&nbsp;&nbsp;Control, as defined under federal law, means ownership, control of or holding irrevocable proxies representing
more than 25% of any class of voting stock, control in any manner of the election of a majority of the company&rsquo;s directors,
or a determination by the regulator that the acquiror has the power to direct, or directly or indirectly to exercise a controlling
influence over, the management or policies of the institution.&nbsp;&nbsp;Acquisition of more than 10% of any class of a bank holding
company&rsquo;s voting stock constitutes a rebuttable presumption of control under the regulations under certain circumstances
including where, is the case with the Company, the issuer has registered securities under Section 12 of the Securities Exchange
Act of 1934.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Federal Securities Laws </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Esquire Financial Holdings, Inc.&rsquo;s common
stock will be registered with the Securities and Exchange Commission prior to the completion of the stock offering. Esquire Financial
Holdings, Inc. will be a reporting company subject to the information, proxy solicitation, insider trading restrictions and other
requirements under the Securities Exchange Act of 1934.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Emerging Growth Company Status </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The Jumpstart Our Business Startups Act (the
&ldquo;JOBS Act&rdquo;), which was enacted in April 2012, has made numerous changes to the federal securities laws to facilitate
access to capital markets. Under the JOBS Act, a company with total annual gross revenues of less than $1.07 billion during its
most recently completed fiscal year qualifies as an &ldquo;emerging growth company.&rdquo; Esquire Financial Holdings, Inc. qualifies
as an emerging growth company under the JOBS Act.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">An &ldquo;emerging growth company&rdquo; may
choose not to hold stockholder votes to approve annual executive compensation (more frequently referred to as &ldquo;say-on-pay&rdquo;
votes) or executive compensation payable in connection with a merger (more frequently referred to as &ldquo;say-on-golden parachute&rdquo;
votes). An emerging growth company also is not subject to the requirement that its auditors attest to the effectiveness of the
company&rsquo;s internal control over financial reporting, and can provide scaled disclosure regarding executive compensation;
however, Esquire Financial Holdings, Inc. will also not be subject to the auditor attestation requirement or additional executive
compensation disclosure so long as it remains a &ldquo;smaller reporting company&rdquo; under Securities and Exchange Commission
regulations (generally less than $75 million of voting and non-voting equity held by non-affiliates). Finally, an emerging growth
company may elect to comply with new or amended accounting pronouncements in the same manner as a private company, but must make
such election when the company is first required to file a registration statement. Such an election is irrevocable during the period
a company is an emerging growth company. Esquire Financial Holdings, Inc. has elected to comply with new or amended accounting
pronouncements in the same manner as a public company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">A company loses emerging growth company status
on the earlier of: (i) the last day of the fiscal year of the company during which it had total annual gross revenues of $1.07
billion or more; (ii) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale
of common equity securities of the company pursuant to an effective registration statement under the Securities Act of 1933; (iii)
the date on which such company has, during the previous three-year period, issued more than $1.0 billion in non-convertible debt;
or (iv) the date on which such company is deemed to be a &ldquo;large accelerated filer&rdquo; under Securities and Exchange Commission
regulations (generally, at least $700 million of voting and non-voting equity held by non-affiliates).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Sarbanes-Oxley Act of 2002 </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The Sarbanes-Oxley Act of 2002 is intended to
improve corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded
companies and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to the securities
laws. We have policies, procedures and systems designed to comply with these regulations, and we review and document such policies,
procedures and systems to ensure continued compliance with these regulations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><A NAME="a_012"></A>MANAGEMENT</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Our Directors and Executive Officers</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following table states our directors&rsquo;
names, their ages as of March 31, 2017, the years that they began serving as directors and when their current term as directors
of Esquire Financial Holdings, Inc. expires.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR>
    <TD NOWRAP STYLE="vertical-align: bottom; width: 20%; border-bottom: Black 1pt solid; text-align: center"><FONT STYLE="font: 8pt Times New Roman, Times, Serif"><B>Name</B></FONT></TD>
    <TD NOWRAP STYLE="vertical-align: top; width: 1%; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="vertical-align: bottom; width: 37%; border-bottom: Black 1pt solid; text-align: center"><FONT STYLE="font: 8pt Times New Roman, Times, Serif"><B>Position(s)
    With the Company</B></FONT></TD>
    <TD NOWRAP STYLE="vertical-align: top; width: 1%; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="vertical-align: bottom; width: 13%; border-bottom: Black 1pt solid; text-align: center"><FONT STYLE="font: 8pt Times New Roman, Times, Serif"><B>Age
    at </B></FONT><FONT STYLE="font-size: 8pt"><BR>
    <FONT STYLE="font-family: Times New Roman, Times, Serif"><B>March 31,</B></FONT><BR>
    <FONT STYLE="font-family: Times New Roman, Times, Serif"><B>2017</B></FONT></FONT></TD>
    <TD NOWRAP STYLE="vertical-align: top; width: 1%; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="vertical-align: bottom; width: 13%; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Director</B></FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Since</B></FONT></P></TD>
    <TD NOWRAP STYLE="vertical-align: top; width: 1%; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="vertical-align: bottom; width: 13%; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Expiration</B></FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>of
        Term</B></FONT></P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Dennis Shields</FONT></TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Executive Chairman</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">50</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2006</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2019</FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Selig A. Zises</FONT></TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Director</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">75</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2009</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2019</FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Todd Deutsch</FONT></TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Director</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">44</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2015</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2019</FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">John Morgan </FONT></TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Director</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">61</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2015</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2019</FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Russ M. Herman</FONT></TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Director</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">74</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2007</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2017</FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Robert J. Mitzman</FONT></TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Director</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">62</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2007</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2017</FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Kevin C. Waterhouse</FONT></TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Director</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">49</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2006</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2017</FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Marc Grossman</FONT></TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Director</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">49</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2013</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2017</FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Janet Hill</FONT></TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Director</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">69</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2016</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2018</FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Anthony Coelho</FONT></TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Director</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">74</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2010</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2018</FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Richard T. Powers</FONT></TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Director</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">69</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2006</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2018</FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Jack Thompson</FONT></TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Director</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">45</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2016</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2017</FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Andrew C. Sagliocca</FONT></TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">President, Chief Executive Officer, Director</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">49</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2007</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">2018</FONT></TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following table sets forth information regarding
our executive officers and their ages as of the date of this prospectus. The executive officers of Esquire Financial Holdings,
Inc. are appointed annually.<B> </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" ALIGN="CENTER" STYLE="width: 95%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR>
    <TD NOWRAP STYLE="vertical-align: bottom; width: 20%; border-bottom: Black 1pt solid; text-align: center"><FONT STYLE="font: 8pt Times New Roman, Times, Serif"><B>Name</B></FONT></TD>
    <TD NOWRAP STYLE="vertical-align: top; width: 1%; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="vertical-align: bottom; width: 58%; border-bottom: Black 1pt solid; text-align: center"><FONT STYLE="font: 8pt Times New Roman, Times, Serif"><B>Position(s)
    With the Company</B></FONT></TD>
    <TD NOWRAP STYLE="vertical-align: top; width: 1%; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="vertical-align: bottom; width: 20%; border-bottom: Black 1pt solid; text-align: center"><FONT STYLE="font: 8pt Times New Roman, Times, Serif"><B>Age
    at </B></FONT><FONT STYLE="font-size: 8pt"><BR>
    <FONT STYLE="font-family: Times New Roman, Times, Serif"><B>March 31, 2017</B></FONT></FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: top"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Dennis Shields</FONT></TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Executive Chairman </FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">50</FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: top"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Andrew C. Sagliocca</FONT></TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">President, Chief Executive Officer, Director</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">49</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Eric S. Bader</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Executive Vice President, Chief Financial Officer, Treasurer and Corporate Secretary</FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">40</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Ari P. Kornhaber</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Executive Vice President, Director of Sales</FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">45</FONT></TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>The Business Background of Our Directors and Executive Officers</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following is a brief discussion of the business
and banking background and experience of our directors and executive officers <FONT STYLE="background-color: white">for at least
the past five years</FONT>. <FONT STYLE="background-color: white">With respect to directors, the biographies also contain information
regarding the person&rsquo;s experience, qualifications, attributes or skills that led to the conclusion that the person should
serve as a director. Unless otherwise indicated, directors and senior officers have held their positions for the past five years.
</FONT>No director has any family relationship, as defined in Item&nbsp;401 of Regulation S-K, with any other director or with
any of our executive officers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Anthony Coelho, Director. </I></B>Mr.
Coelho has served as Chair of the Advisory Board for Bender Consulting Services since 2002 and was Chair and a Board Member for
the American Association of People with Disabilities and the Lead Independent Director of Service Corporation International. Mr.
Coelho was a prominent member of the U.S. House of Representatives from 1978 &ndash; 1989. While a member of the House of Representatives,
he authored the Americans with Disabilities Act, widely recognized as one of the most important pieces of civil rights legislation
in the last 40 years. Mr. Coelho's former and current business affiliations include service on a number of corporate boards and
as CEO of Wertheim Schroder Investment Services. Mr.&nbsp;Coelho has been a member of the Esquire Bank board of directors since
2010. Mr. Coelho provides the Board with valuable perspective on general business oversight, as well as potential strategic initiatives.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Todd Deutsch, Director</I></B>. Mr. Deutsch
is a private investor and entrepreneur. Since 2012, Mr. Deutsch has managed his family office. From 2009 to 2012, Mr. Deutsch was
the Portfolio Manager/Principal at Bascom Hill Partners, a wealth management services company. Prior to running his family office
and Bascom Hill Partners, </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Mr. Deutsch spent twenty years as a trader with Goldman Sachs
and various hedge funds. Mr. Deutsch has been a member of the Esquire Bank board of directors since 2015. Mr. Deutsch
provides the Board with extensive financial and business experience as well as valuable insight into managing and overseeing
a business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Marc D. Grossman, Director</I>. </B>As
a Founding and senior partner of The Sanders Law Firm since 2003, Mr. Grossman is an innovator and leader in the mass settlement
of medical claims and mass torts. Mr. Grossman's deep-rooted commitment to his clients and practice has led to his being a frequent
speaker and national advocate for victim's rights. Mr. Grossman currently serves on The Board of Directors of the New York State
Trial Lawyers Association, The Executive Committee of the Association of Trial Lawyers of America, and is a member of the Mass
Tort Trial Lawyers Association, the Million Dollar Advocates Forum and the leaders Forum of the American Association of Justice.
Mr. Grossman has been a member of the Esquire Bank board of directors since 2013. Mr. Grossman provides the Board with an important
insight into the legal industry and experience with managing and overseeing a business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Russ M. Herman, Director. </I></B>Mr.
Herman has been senior partner at the law firm Herman, Herman &amp; Katz, L.L.C., a national law firm headquartered in New Orleans,
Louisiana, since 1966. Mr. Herman is the past president of the Association of Trial Lawyers of America, Civil Justice Foundation,
Roscoe Pound Foundation and the American Association of Justice. He is an author, frequent speaker at law schools and national
legal seminars and conventions. Mr. Herman is a member of the National Trial Lawyers Hall of Fame. Mr. Herman has been a member
of the Esquire Bank board of directors since 2007 and provides the Board with valuable insight into the legal industry.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Janet Hill, Director. </I></B>Ms. Hill
has served as Principal at Hill Family Advisors since 2008, where she oversees her family's assets and investments. From 1981 until
her retirement in 2010, Ms. Hill was the owner of and served as Vice President of Alexander &amp; Associates, Inc., a management
consulting firm where she provided advice and counseling to major corporations on policies and procedures to achieve and maintain
an inclusive workforce. She is currently a member of the boards of directors of the Carlyle Group, Dean
Foods Company and Echo360. Ms. Hill is a former director of Wendy&rsquo;s/Arby&rsquo;s Group, Inc. and Sprint Nextel Corporation.
She also serves on the Board of Trustees at Duke University, John F. Kennedy Center for the Performing Arts, the Knight Commission
on Intercollegiate Athletics, and the Wolf Trap Foundation. Ms. Hill has a Bachelor of Arts from Wellesley College and a Master
of Arts from the University of Chicago, both in Mathematics. Ms. Hill has been a member of the Esquire Bank board of directors
since 2016. Ms. Hill provides the Board with an important business and strategic insight.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Robert J. Mitzman, Director. </I></B>Mr.
Mitzman is Founder, Chairman, President and Chief Executive Officer of the Quick Group of Companies since 1981, having amassed
more than 35 years of experience in the worldwide specialized courier industry. The Quick Group of Companies serves as a provider
of worldwide-mission-critical logistics and transportation solutions. Mr. Mitzman previously served on the Board of Directors for
Perfumania Holdings as well. Mr. Mitzman has been a member of the Esquire Bank board of directors since 2007 and provides the Board
with extensive executive experience as a Chief Executive Officer, including leading an organization with global operations, experience
in human resources and growing a business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>John Morgan, Director. </I></B>Mr. Morgan
founded Morgan &amp; Morgan in 1988, to represent the people, not the powerful. Under his leadership and vision, Morgan &amp; Morgan
grew to become a prominent national law firm, with offices throughout North America and Europe, employing more than 300 lawyers
and a support staff of 1,400. Mr. Morgan lectures across the country on the practice of law. He has been an active member of the
Florida Justice Association and served as a FLAG trustee. Mr. Morgan has also received Martindale-Hubbell's esteemed &ldquo;AV&rdquo;
rating, which recognizes lawyers with the highest ethical standards and professional ability. Mr. Morgan attended the University
of Florida and the Levin School of Law University of Florida, where Mr. Morgan serves as a member of the Board of Trustees. Mr.
Morgan has been a member of the Esquire Bank board of directors since 2015. Mr. Morgan provides the Board with valuable insight
into the legal industry and experience with managing and overseeing a business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B><I>Richard T. Powers, Director. </I></B>Mr.
Powers served as Esquire Bank's President and Chief Executive Officer since Esquire Bank's pre-opening organizational stage in
2005 through 2008. Prior to joining Esquire Bank, Mr. Powers was President, U.S. Direct Services for Fiserv CBS. Mr. Powers has
over 40 years of experience in all areas of the financial services industry, both banking and brokerage. He has served as President
and Chief Operating Officer of</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Waterhouse National Bank and Executive Vice
President and Chief Operations Officer of North Fork Bank, among other banking positions. Since 2009, Mr. Powers has been the owner
of RT Powers &amp; Associates, a banking and financial services consultant firm and he is recognized as an expert witness for banking
technology patent infringement. Mr. Powers is a founding organizer of Esquire Bank. Mr. Powers provides the Board with important
experience and insight into the financial services industry.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Andrew C. Sagliocca, President, Chief
Executive Officer and Director. </I></B>Mr. Sagliocca served as Esquire Bank's Chief Financial Officer when he joined Esquire Bank
in February 2007. He became Esquire Bank's Chief Executive Officer in January 2009. Prior to joining Esquire Bank, Mr. Sagliocca
was Senior Vice President and Corporate Controller of North Fork Bank from 1999 to 2007. Mr. Sagliocca has more than 27 years of
experience in the financial services industry. Mr. Sagliocca&rsquo;s extensive experience in the financial services provides the
Board with a unique perspective on Esquire Bank&rsquo;s business and strategic direction.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Dennis Shields, Executive Chairman
of the Board. </I></B>Mr. Shields is the Executive Chairman of the Board of Directors and was a founding organizer of Esquire Bank.
<B><I> </I></B>Since its inception in 2000, Mr. Shields has served as Chief Executive Officer of Plaintiff Funding Corp. (dba LawCash),
a New York-based specialty finance company that provides financial services products. Since 2014, Mr. Shields has been serving
as the Chairman at YieldStreet, an online platform for alternative investments and he is also the Chairman of Keeps America, a
company that works with law firms, disability advocates, and third-party administrators to distribute settlement awards and government
benefits to clients through its prepaid card. Mr. Shields served as a lay member of the Grievance Committee to the Second and Eleventh
Judicial Departments appointed by presiding judge from 1996 to 2004 and previously served on the New York State Health Information
and Quality Improvement Committee. Mr. Shields has authored two books and is a frequent speaker in both the legal and finance community.
Mr. Shields&rsquo; extensive experience in both the financial services and legal industry provides the Board with an important
perspective on Esquire Bank&rsquo;s business and strategic direction.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Jack Thompson, Director</I></B>. Since
2010, Mr. Thompson has been the Head of Financial Services Investments at Gapstow Capital Partners, an alternative investment firm
based in New York City. Mr. Thompson is responsible for the firm's investments within the banking industry and is a member of the
Gapstow Capital Partners Investment Committee. Prior to joining Gapstow Capital Partners, Mr. Thompson held positions at Deutsche
Bank Securities, Goldman Sachs, Novantas, and Booz Allen Hamilton. He serves as Director on the Boards of Coastal Financial Corporation
(and its subsidiaries) in Everett, Washington and Seaside National Bank in Orlando, Florida. He previously was a Director on the
Board of Pan Pacific Bank in Fremont, California. Mr. Thompson has been a member of the Board since 2016. He graduated from Yale
University with a B.A. in History and he received his M.B.A. with honors from the University of Chicago with concentrations in
Finance and Accounting. Mr. Thompson is also a former 1st Lieutenant in the Armor Branch of the US Army Reserve. Mr. Thompson provides
the Board with important experience and insight into the financial services industry. In connection with the purchase of our capital
stock in 2014, we granted CJA Private Equity Financial Restructuring Master Fund I, LP the right to designate a director so long
as it, together with its affiliates, beneficially owns at least 4.0% (four percent) of our total outstanding capital stock. Mr.
Thompson is the designee of CJA Private Equity Financial Restructuring Master Fund I, LP.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Kevin Waterhouse, Director. </I></B>Mr.
Waterhouse is Vice President and Investment Advisor of L.M. Waterhouse &amp; Company, a Valhalla, New York-based registered investment
advisory firm. Mr. Waterhouse has worked at L.M. Waterhouse since 2009. Mr. Waterhouse previously served as First Vice President
&ndash; Operations &amp; Product Development of Waterhouse National Bank. Mr. Waterhouse is a founding organizer of Esquire Bank.
Mr. Waterhouse provides the Board with a valuable perspective on general business oversight as well as on potential strategic initiatives.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Selig A. Zises, Director. </I></B>Mr.
Zises is a retired investor. Mr. Zises was the founder and CEO of Integrated Resources, a financial services company, from 1969
to 1988. Mr. Zises is a founding organizer of Esquire Bank. Mr. Zises&rsquo; extensive experience in the financial services industry
provides the Board with an important perspective on the Bank&rsquo;s business and strategic direction.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Executive Officers who are not Directors</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Eric S. Bader, Executive Vice President,
Chief Financial Officer, Treasurer and Corporate Secretary. </I></B>Prior to his appointment as Executive Vice President in February
2011, Mr. Bader served as our Senior Vice President, Chief Financial Officer and Treasurer since January 2009. Prior to this, Mr.
Bader served as Esquire Bank&rsquo;s Senior Vice President and Treasurer, since joining Esquire Bank in January 2008. Prior to
joining Esquire Bank, Mr. Bader was Vice President at Goldman Sachs and served as a Vice President and Investment Officer at North
Fork Bank. Mr. Bader has 17 years of experience in the financial services industry.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Ari P. Kornhaber, Executive Vice President,
Director of Sales</I></B>. Mr. Kornhaber has served as Director of Sales at Esquire Bank since 2013. From 2004 to 2013, Mr. Kornhaber
served as National Marketing Director at Plaintiff Funding Holding, Inc. (dba LawCash). Mr. Kornhaber has spoken on the subject
of financing for lawyers, law firms and their clients, and the ethics surrounding the same, at numerous seminars and conferences
across the United States. After receiving his law degree from Touro Law School in New York, Mr. Kornhaber was a practicing plaintiff&rsquo;s
lawyer in New York City with the law firm of Pariser and Vogelman, PC and was a trial attorney for the law firm of Napoli, Kaiser
and Bern, LLC, where he specialized in personal injury, medical malpractice and mass tort litigation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Board Independence </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Under the rules of the NASDAQ Capital Market,
independent directors must comprise a majority of our board of directors within a specified period of time of this offering. The
rules of the NASDAQ Capital Market, as well as those of the SEC, also impose several other requirements with respect to the independence
of our directors. Our board of directors has evaluated the independence of its members and our director nominee based upon the
rules of the NASDAQ Capital Market and the SEC. Applying these standards, our board of directors has affirmatively determined that,
with the exception of Mr. Sagliocca and Mr. Shields, each of our current directors is an independent director, as defined under
the applicable rules. Mr. Sagliocca is not independent because he is an executive officer of Esquire Financial Holdings, Inc. and
Mr. Shields is not independent because he is the executive chairman of Esquire Financial Holdings, Inc.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Election and Classification of Directors</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In accordance with
the terms of our charter, our board of directors is divided into three classes, Class I, Class II and Class III, with each class
serving staggered three-year terms and is divided as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">The Class I directors are Russ M. Herman, Robert J. Mitzman, Kevin C. Waterhouse, Marc Grossman
and Jack Thompson. Their term will expire at the annual meeting of stockholders expected to be held in 2017.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">The Class II directors are Janet Hill, Anthony Coelho, Richard T. Powers and Andrew J. Sagliocca.
Their term will expire at the annual meeting of stockholders expected to be held in 2018.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">The Class III directors are Dennis Shields, Selig Zises, Todd Deutsch and John Morgan. Their term
will expire at the annual meeting of stockholders expected to be held in 2019.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Transactions With Certain Related Persons
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Sarbanes-Oxley Act of 2002 generally
prohibits publicly traded companies from making loans to their executive officers and directors, but it contains a specific exemption
from the prohibition for loans made by federally insured financial institutions, such as Esquire Bank, to their executive officers
and directors in compliance with federal banking regulations. At December 31, 2016, all of our loans to directors and executive
officers were made in the ordinary course of business, were made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable loans with persons not related to Esquire Bank, and did not involve
more than the normal risk of collectability or present other unfavorable features. These loans were performing according to their
original terms at December 31, 2016, and were made in compliance with federal banking regulations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Committees of the Board of Directors </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We conduct business through meetings of
our board of directors and its committees. The board of directors of the Company has established standing committees, including
an Audit Committee, Compensation Committee, a Corporate Governance and Nominating Committee and a Strategic Oversight Committee.
Each of these committees operates under a written charter, which governs its composition, responsibilities and operations. Our
board of directors also may establish such other committees as it deems appropriate, in accordance with applicable law and regulations
and our corporate governance documents.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Audit Committee</I>.</B> The Audit
Committee assists the board of directors in fulfilling its responsibilities for general oversight of the integrity of our financial
statements, compliance with legal and regulatory requirements, the independent auditors&rsquo; qualifications and independence,
and the performance of our internal audit and risk assessment function and independent auditors. Among other things, the Audit
Committee:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">appoints, evaluates and determines the compensation of our independent auditors;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">reviews and approves the scope of the annual audit, audit fees and financial statements;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">reviews disclosure controls and procedures, internal controls, internal audit function and corporate
policies with respect to financial information;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">oversees investigations into complaints concerning financial matters, if any;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">reviews related party transactions as required; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">annually reviews the Audit Committee charter and the committee&rsquo;s performance.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Audit Committee works closely with management
as well as our independent auditors. The Audit Committee has the authority to obtain advice and assistance from and receive appropriate
funding to engage outside legal, accounting or other advisors as the Audit Committee deems necessary to carry out its duties.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Audit Committee is composed solely of
members who satisfy the applicable independence and other requirements of the SEC and the NASDAQ Capital Market for Audit Committees
and at least one of its members is an &ldquo;audit committee financial expert.&rdquo; The Audit Committee has adopted a written
charter that among other things, specifies the scope of its rights and responsibilities. The charter will be available on our website
at <U>www.esquirebank.com</U>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Compensation Committee</I>.</B> The
Compensation Committee is responsible for discharging the board of directors&rsquo; responsibilities relating to compensation of
the executives and directors. Among other things, the Compensation Committee:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">evaluates compensation strategies;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">reviews and approves objectives relevant to executive officer compensation;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">evaluates performance and determines the compensation of the Chief Executive Officer and other
executive officers in accordance with those objectives;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">reviews and oversees compensation and benefit plans;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">recommends to the board of directors compensation for directors;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">prepares the Compensation Committee report required by SEC rules to be included in our annual report;
and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">annually reviews the Compensation Committee charter and the committee&rsquo;s performance.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Compensation Committee is composed solely
of members who satisfy the applicable independence requirements of the SEC and the NASDAQ Capital Market. The Compensation Committee
has adopted a written charter that, among other things, specifies the scope of its rights and responsibilities. The charter will
be available on our website at <U>www.esquirebank.com</U>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Corporate Governance and Nominating
Committee</I></B>. The Corporate Governance and Nominating Committee is responsible for making recommendations to our board of
directors regarding candidates for directorships and the size and composition of our board of directors. In addition, the Corporate
Governance and Nominating Committee is responsible for overseeing our corporate governance guidelines and reporting and making
recommendations to our board of directors concerning governance matters. Among other things, the Corporate Governance and Nominating
Committee:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">identifies qualified individuals to be directors consistent with the criteria approved by the board
of directors and recommending director nominees to the full board of directors;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">reviews the structure of the committees of the board of directors;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">develops and recommends procedures for reviewing shareholder recommendations for director nominees;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">develops the Company&rsquo;s code of business conduct and ethics;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">oversees management succession planning;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">leads the board of directors in its annual performance review;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">develops and recommends corporate governance guidelines; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">annually reviews the Corporate Governance and Nominating Committee&rsquo;s charter and the committee&rsquo;s
performance.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Corporate Governance and Nominating
Committee is composed solely of members who satisfy the applicable independence requirements of the SEC and the NASDAQ Capital
Market. The written charter for our Corporate Governance and Nominating Committee will be available on our website at <U>www.esquirebank.com</U>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Strategic Oversight Committee</I></B>.
The Strategic Oversight Committee is responsible for oversight of strategic planning, capital planning, contingency planning and
new product planning. Among other things, the Strategic Oversight Committee:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>reviews Esquire Bank&rsquo;s Strategic Business and Capital Plan on a continual basis and provide recommendations to the Board
for modifications as deemed necessary, based on:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">o</FONT></TD><TD>changing needs of Esquire Bank stakeholders;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">o</FONT></TD><TD>changes in Esquire Bank&rsquo;s external environment;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">o</FONT></TD><TD>changes in Esquire Bank&rsquo;s internal situation that may affect the strategy of Esquire Bank;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">o</FONT></TD><TD>the need to ensure continued alignment of the strategy with the Board&rsquo;s preferred risk profile for Esquire Bank; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 1in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">o</FONT></TD><TD>regulatory requirements and considerations;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in"></P>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><A HREF="#TableOfContents">Table of Contents</A>&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>monitors management&rsquo;s compliance with the requirements of the Strategic Business and Capital Plan;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>reviews new products, services or lines-of-business; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>ensures that proper processes, personnel and control systems are in place to monitor implementation and adherence to the Strategic
Business and Capital Plan and the operating goals and objectives contained therein.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Code of Business Conduct and Ethics</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our board of directors has adopted a code
of business conduct and ethics (our &ldquo;Code of Ethics&rdquo;) that applies to all of our directors, officers and employees,
including our principal executive officer, principal financial officer, principal accounting officer and persons performing similar
functions. The Code of Ethics is available upon written request to Corporate Secretary, Esquire Financial Holdings, Inc., 100 Jericho
Quadrangle, Suite 100, Jericho, New York 11753.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If we amend or grant any waiver from a provision
of our Code of Ethics that applies to our executive officers, we will publicly disclose such amendment or waiver on our website
and as required by applicable law, including by filing a Current Report on Form 8-K.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_013"></A>EXECUTIVE COMPENSATION</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">As an emerging growth
company under the JOBS Act, we have opted to comply with the executive compensation disclosure rules applicable to &ldquo;smaller
reporting companies&rdquo; as such term is defined in the rules promulgated under the Securities Act, which permit us to limit
reporting of executive compensation to our principal executive officer and our two other most highly compensated executive officers,
which are referred to as our &ldquo;named executive officers.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">The compensation reported
in the Summary Compensation Table below is not necessarily indicative of how we will compensate our named executive officers in
the future. We will continue to review, evaluate and modify our compensation framework to maintain a competitive total compensation
package. As such, and as a result of our becoming a publicly traded company, the compensation program following this offering could
vary from our historical practices.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">Our named executive officers,
which consist of our executive chairman, principal executive officer and the Company&rsquo;s two other most highly compensated
executive officers, are:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Dennis Shields, Executive Chairman of the Board</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Andrew C. Sagliocca, President, Chief Executive Officer and Director</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Eric S. Bader, Executive Vice President, Chief Financial Officer,
Treasurer and Corporate Secretary</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Ari P. Kornhaber, Executive Vice President and Director of Sales</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Summary Compensation Table</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table sets forth information
regarding the compensation paid, awarded to, or earned for our fiscal years ended December 31, 2016 and 2015 for each of our named
executive officers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP COLSPAN="27" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Summary
    Compensation Table</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Name and Principal Position</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Year</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Salary<BR>
    ($)</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Bonus<BR>
    ($)</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Stock</B><BR>
                                         <B>Awards</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>($)</B></FONT></P></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Option
    <BR>
    Awards<BR> ($)(1)</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">All
    Other<BR> Compensation<BR> ($)(2)</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Total<BR>
    ($)</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 30%; text-align: left; text-indent: -12pt; padding-left: 12pt">Dennis Shields</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 9%; text-align: center; padding-left: 0.15in">2016</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">445,096</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">100,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-family: Symbol">&nbsp;</TD>
    <TD STYLE="width: 1%; font-family: Symbol; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; font-family: Symbol; text-align: right"><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="width: 1%; font-family: Symbol; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">366,415</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">6,580</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">918,091</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-style: italic; text-align: left; text-indent: 1.2pt; padding-left: 12pt">Executive Chairman</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.15in">2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">233,654</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">100,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol; text-align: right"><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">465,252</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">114</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">799,020</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -12pt; padding-left: 12pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.15in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 12pt">Andrew C. Sagliocca</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.15in">2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">426,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">100,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol; text-align: right"><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">210,283</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">35,146</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">771,429</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-style: italic; text-align: left; text-indent: 1.2pt; padding-left: 12pt">Director, President and Chief Executive Officer</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.15in">2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">311,538</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">100,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol; text-align: right"><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">87,234</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">25,374</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">524,146</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.15in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 12pt">Eric S. Bader</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.15in">2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">363,077</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">100,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol; text-align: right"><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">105,141</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">26,805</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">595,023</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-style: italic; text-align: left; text-indent: 1.2pt; padding-left: 12pt">Executive Vice President, Chief Financial Officer, Treasurer and Corporate Secretary</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.15in">2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">311,538</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">75,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol; text-align: right"><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">58,157</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">20,090</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">464,785</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: 1.2pt; padding-left: 12pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.15in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 12pt">Ari P. Kornhaber</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.15in">2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">363,061</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">100,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol; text-align: right"><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">105,141</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">51,805</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">620,007</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-style: italic; text-align: left; text-indent: 1.2pt; padding-left: 12pt">Executive Vice President and Director of Sales</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center; padding-left: 0.15in">2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">311,538</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol; text-align: right"><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol; text-align: right"><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">29,077</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">120,090</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">460,705</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(1)</TD><TD STYLE="text-align: justify">These amounts represent the aggregate
                                         grant date fair value for outstanding stock option awards granted during the year indicated,
                                         computed in accordance with FASB ASC Topic 718. The assumptions used to determine the
                                         value of stock options are described in Note 4 of the Notes to the Interim Condensed
                                         Consolidated Financial Statements and see  Note 9 of the Notes to the Consolidated
                                         Financial Statements. The actual value, if any, realized by an executive officer from
                                         any option will depend on the extent to which the market value of the common stock exceeds
                                         the exercise price of the option on the date the option is exercised. Accordingly, there
                                         is no assurance that the value realized by an executive officer will be at or near the
                                         value shown above.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(2)</TD><TD STYLE="text-align: justify">The amounts in this column represent all other compensation not reported in prior columns in this table, including perquisites,
the aggregate value of which exceeds $10,000. This column consists of medical, dental, vision disability, life, AD&amp;D, car allowances
or other benefits, and for Mr. Kornhaber, it also consists of sales commissions.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Employment Agreements </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Company and Bank have jointly entered
into employment agreements with Dennis Shields, our Executive Chairman and Andrew C. Sagliocca, our President and Chief Executive
Officer, each with an initial term of three years and have also entered into employment agreements with Eric Bader, our Executive
Vice President and Chief Financial Officer, and with Ari Kornhaber, our Executive Vice President and Director of Sales, each with
an initial term of two years. The agreements provide for daily automatic extensions, unless the executives&rsquo; are provided
with written notice of the discontinuance of such automatic extensions by the Company&rsquo;s or Bank&rsquo;s Board of Directors
at any time by delivery of a written notice to such executive in accordance with the procedures set forth in the agreement, in
which event the agreement shall expire at the end of 36 months (24 months with respect to Mr. Bader&rsquo;s and Kornhaber&rsquo;s
agreement) following the date of the non-extension notice. Under the employment agreements, the 2017 base salary for Messrs. Shields,
Sagliocca, Bader, and Kornhaber is $475,000, $475,000, $400,000 and $400,000, respectively. The base salaries are reviewed at least
annually and may be increased but not decreased. In addition to the base salary, each agreement provides that the executive will
receive all benefits provided to full-time employees of the Company or Bank, including among other things, bonus plans, retirement
plans, pension plans and fringe benefits applicable to executive personnel, including guaranteed stock-based awards, in the case
of Mr. Shields, equal to not less than 25% of the each type of awards granted under the plan; in the case of Mr. Sagliocca, of
no less than the greater of (i) 12.5% of the total number of such type of awards granted for such calendar year to all persons
under all such Stock Plans, or (ii) 50% of the total number of such type of awards granted for such calendar year to the Company&rsquo;s
Executive Chairman under all such Stock Plans; and in the case of Mr. Bader and Mr. Kornhaber, not less than 50% of the total number
of such awards granted to the Chief Executive Officer. Additionally, under the agreements, the executives will receive monthly
automobile allowances and a life insurance policy in an amount equal to at least three (3) times, in the case of Messrs. Shields
and Sagliocca, and two (2) times, in the case of Messrs. Bader and Kornhaber, of the executive&rsquo;s average (i) base salary
and (ii) bonus payable under the bonus plan for the prior two full calendar years.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The agreements permit the Company or Bank
to terminate the executive&rsquo;s employment for cause (as defined in the agreement) at any time. In the event the we choose to
terminate an executive&rsquo;s employment (i) for reasons other than for cause, his death or disability or his retirement (as defined
in the agreement), (ii) in the event of the executive&rsquo;s resignation from the Company or Bank for &ldquo;good reason&rdquo;
upon (a)&nbsp;failure to be reappointed to his current office, (b) a material change in his functions, duties or responsibilities,
(c)&nbsp;the liquidation or dissolution of the Company or Bank, or (d) a breach of the agreement by the Company or Bank, then in
any such event, the executive, or in the event of death, his beneficiaries, would be entitled to receive a cash severance payment.
The cash severance payment would be an amount equal to (A) the greater of: (i) his base salary payable during the remaining term
of the agreement or (ii) 100% of his base salary as of the termination date, plus (B) the dollar amount of his bonus paid to the
executive for the most recently completed calendar year multiplied by the greater of (i) the number of full and partial years in
the remaining term of the agreement or (ii) one (1). In addition, each executive would be entitled to continue to receive for a
period of eighteen (18) months (the &ldquo;COBRA period&rdquo;) continuing medical and dental insurance coverage provided to former
employees of the Company or Bank at no cost to executive. Each executive also will be entitled to a lump sum cash payment payable
within 30 days following his termination equal to the sum of the estimated cost of medical and dental coverage from the last day
of the COBRA period through the remaining term of the agreement plus the expense of converting his Company-paid life insurance
to an individual life insurance policy.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In the event that after the occurrence of
a change in control, one of the executive&rsquo;s employment is (i) involuntarily terminated within 24 months (other than for Cause),
(ii) terminated by him for good reason within 24 months, or (iii) terminated by him for any reason (other than good reason) within
12 months, then the Company or Bank will pay him a cash payment equal to 299% of his average annual compensation in the case of
Messrs. Shields and Sagliocca (200% in the case of Messrs. Bader and Kornhaber) over the five most recently completed calendar
years. For these purposes, annual compensation shall include his base salary, any other taxable income, including the income recognized
on the vesting of restricted stock or exercise of stock options, commissions, bonuses (whether paid or accrued), as well as retirement
benefits, director or committee fees and fringe benefits paid or to be paid during any such year, amounts paid to the profit sharing
plan or employee stock ownership plan, if any, and other retirement contributions or benefits, including to any tax-qualified plan
(whether or not taxable) made or accrued on behalf of executive. Such payment will be made to him within 30 days following his
termination of employment. In addition, each executive will be entitled to the same continuation of health care coverage provided
in the immediately preceding paragraph, as well as the cash lump sum payment to equal to the estimated cost of his and his family&rsquo;s
medical and dental coverage from the last day of the COBRA period through the remaining term of the agreement plus the expense</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">of converting his Company-paid life insurance to an individual life insurance policy. If the payment and benefits payable to an
executive following a change in control would result in an excess parachute and excise taxes payable by the executive, the Company
and or Esquire Bank will promptly pay or reimburse the executive for such taxes, as well as any other federal, state or local taxes
that result from the Company&rsquo;s or Bank&rsquo;s payment of such taxes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In exchange for Esquire Bank&rsquo;s and
Company&rsquo;s promises under the employment agreements, each executive agrees that in the event of his termination under the
employment agreement, other than due to disability or a change in control, he agrees that for a period of one year following such
termination he will not compete with, or solicit employees or customers, suppliers vendors of the Company or Esquire Bank to terminate,
reduce, limit or change their business relationship with the Company or Esquire Bank, and further will not disclose confidential
information or disparage the Company or Bank.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><B>Incentive Compensation
Plans</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><B><I>2007 Stock Option
Plan. </I></B>At the May 23, 2007 annual meeting, the stockholders of Esquire Bank approved the Esquire Bank 2007 Stock Option
Plan. Under this plan, directors and key principal officers of Esquire Bank, and other persons designated by the Compensation Committee,
are eligible to participate in the 2007 Stock Option Plan. Pursuant to the 2007 Stock Option Plan, grants may be made of the following:
(i) options to purchase Common Stock intended to qualify as incentive stock options under Section 422 of the Internal Revenue Code,
which may only be granted to employees of Esquire Bank; and (ii) options that do not so qualify (&ldquo;nonstatutory options&rdquo;),
which may be granted to nonemployee directors, officers and other employees, and others. In connection with Esquire Bank&rsquo;s
reorganization as the wholly-owned subsidiary of the Company in 2011, the 2007 Stock Option Plan was assumed by the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">The 2007 Stock Option
Plan reserves 270,000 shares of the Company common stock for issuance to the employees, directors of Esquire Bank and others through
the grants of stock options. Options to purchase 262,500 shares of the Company&rsquo;s common stock have been granted to officers,
directors and others.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">Under the 2007 Stock Option
Plan, unless the Compensation Committee determines otherwise, all option grants vest over a 5-year time period, with 20% of the
grant vesting per year commencing one year after the date of grant. The Committee shall determine the term during which each option
may be exercised, but in no event shall either a non-statutory option or an incentive stock option be exercisable in whole or in
part more than 10 years from the date of grant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">Upon the termination of
employment or termination of an outside director&rsquo;s service from the Board of Directors for any reason other than death, disability,
a change in control, or termination for cause, in each case as defined in the 2007 Stock Option Plan, an optionee&rsquo;s stock
options will be exercisable only as to those shares that were immediately exercisable by such individual at the date of termination
and only for a period of three (3) months following termination. In the event of termination for cause all rights under the participant&rsquo;s
stock options shall expire upon termination. Upon termination of employment or from service on the Board of Directors, due to death,
disability or following a change in control, all stock options, whether or not exercisable at such time, will be exercisable for
a period of one (1) year following the date of termination of employment or board service. In certain circumstances, incentive
stock options will cease to be treated as such if exercised more than three months after the optionee ceases to perform services
for Esquire Bank. The maximum number of shares that may be subject to all awards granted to any one employee of Esquire Bank is
67,500. The maximum aggregate number of shares that may be awarded pursuant to the exercise of incentive stock options is 67,500.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">Generally, all incentive
stock options granted under the Stock Option Plan will be nontransferable except by will or in accordance with the laws of descent
and distribution or pursuant to a domestic relations order, except as otherwise permitted by the Committee. The Compensation Committee
may permit a participant to designate a beneficiary to exercise or receive any rights that may exist under the 2007 Stock Option
Plan upon the participant&rsquo;s death.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">Shares as to which awards
may be granted under the 2007 Stock Option Plan, and shares then subject to awards, will be adjusted by the Committee in the event
of any merger, consolidation, reorganization, recapitalization, stock dividend, pro rata return of capital, stock split or other
change in the corporate structure of Esquire Bank or other increases or decreases in the number of shares outstanding without the
receipt or payment of consideration by Esquire Bank.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"></P>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><A HREF="#TableOfContents">Table of Contents</A>&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><B><I>2011 Stock Compensation
Plan. </I></B>On May 26, 2011, the stockholders of the Company approved its 2011 Stock Compensation Plan. The 2011 Stock Compensation
Plan authorizes the issuance of up to 404,607&nbsp;shares of Company common stock pursuant to grants of incentive and non-qualified
stock options, restricted stock awards and restricted stock unit awards to officers, employees, directors and consultants of the
Company and Esquire Bank. On August 26, 2015, the stockholders of the Company approved of an amendment to the Company&rsquo;s 2011
Stock Compensation Plan to authorize 350,000 additional shares for issuance under that plan. Options to purchase 750,545 shares
of common stock have been granted to officers, directors and others as of the date of this document and 4,062 shares remain available
for grant under the 2011 Stock Compensation Plan.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">The 2011 Stock Compensation
Plan is administered by the members of the Compensation Committee of the Board of the Company, which has authority to make grants
under the plan and to determine the types of awards and the number of shares of stock subject to any award, in its discretion.
The Compensation Committee has full and exclusive power within the limitations set forth in the 2011 Stock Compensation Plan to
make all decisions and determinations regarding the selection of participants and the granting of awards; establishing the terms
and conditions relating to each award; and interpreting and otherwise construing the 2011 Stock Compensation Plan.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">Employees, directors,
officers and consultants of the Company or its subsidiaries are eligible to receive awards under the 2011 Stock Compensation Plan,
except that non-employees may not be granted incentive stock options.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">The Compensation Committee
may, in its discretion, grant any or all of the types of awards described in the 2011 Stock Compensation Plan to eligible participants.
The Compensation Committee will, in its discretion, determine the types of awards made and establish other terms and conditions
applicable to the award. Each award granted under the 2011 Stock Compensation Plan may be evidenced by an award agreement approved
by the Committee, which sets forth the terms and conditions of the award, including vesting and specific performance goals or measures
established in connection with each award.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">The Committee may determine
the type of award and the terms and conditions of each award under the 2011 Stock Compensation Plan. Awards under the 2011 Stock
Compensation Plan will be either awards that (i) vest over a period of years (or immediately) and do not contain specific performance
measures for vesting to occur, or (ii) awards that are based on performance measures. Awards also may be granted in any combination
determined by the Committee, consisting of stock options, restricted stock awards and restricted stock unit awards.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">In connection with any
award, the Compensation Committee may grant a tax gross-up right to the holder of an award to reimburse the holder with the taxes
that may be due and payable under Section 280G of the Internal Revenue Code of 1986, as amended, as a result of the vesting of
an award upon the occurrence of a change in control.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">If the right to become
vested in an award under the 2011 Stock Compensation Plan is conditioned on the completion of a specified period of service with
the Company or its subsidiaries, without the achievement of performance measures or objectives, then the required period of service
for full vesting shall be determined by the Committee and evidenced in the award agreement. Unless otherwise specified in an award
agreement, the vesting period for an award of restricted stock shall be three years with respect to an outside director and five
years with respect to an officer or an employee.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">The vesting date of performance-based
awards is the date on which all the performance measures are attained and the performance period is concluded. Any unvested performance-based
awards for which the performance measures are not satisfied will be forfeited without consideration. Unless otherwise provided
to the contrary in an award agreement, each stock option, restricted stock award or restricted stock unit granted under the 2011
Stock Compensation Plan shall vest immediately upon the employee or director&rsquo;s death, disability or retirement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">Unless otherwise
provided in an award agreement, in the event of a participant&rsquo;s termination of service for any reason other than
disability, retirement or death or termination for cause, then (i) any stock options shall be exercisable only as to those
awards that were vested on the date of termination of service and only for a period of three months following termination,
and (ii) any restricted stock awards and other awards that have not vested as of the date of termination of service shall
expire and be forfeited.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">In the event of termination
for cause, any awards that have not vested, or have vested but have not been exercised (in the case of stock options) shall expire
and shall be forfeited. Unless otherwise provided in an award agreement, upon termination of service due to death, disability or
retirement, all stock options shall be exercisable as to all shares subject to an outstanding award, whether or not then exercisable,
and all other awards shall become fully vested at the date of termination of service. Stock options may be exercised for a period
of one year following such termination of service. Under the Code, no stock option shall be eligible for treatment as an incentive
stock option in the event such option is exercised more than one year following termination of service due to disability, and in
order to obtain incentive stock option treatment by heirs or devisees of the stock option holder, the stock option holder&rsquo;s
death must have occurred while employed or within three months of termination of service.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">Upon the occurrence of
a change in control (as defined in the 2011 Stock Compensation Plan) of the Company, the Committee and the Board of Directors may
provide that all stock options shall be assumed or equivalent options shall be substituted by the acquiring corporation, or that
the holders of the stock options shall receive a cash payment for each stock option surrendered equal to the difference between
the cash consideration paid by the acquiring corporation and the exercise price of each option.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">Unless otherwise provided
in an award agreement, upon the occurrence of a change in control, all outstanding options then held by a participant will become
fully exercisable and all restricted stock awards and restricted stock unit awards shall be fully earned and vested. In addition,
any performance measure attached to an award under the 2011 Stock Compensation Plan shall be deemed satisfied as of the date of
the change in control.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>




<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><B>Outstanding Equity Awards
at Fiscal Year End</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">The following table shows
stock options outstanding for each of our named executive officers as of December 31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-left: 0"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; padding-left: 0"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="15" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; padding-left: 0"><FONT STYLE="font-size: 8pt">Option
    Awards</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid; padding-left: 0"><FONT STYLE="font-size: 8pt">Name</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; padding-left: 0"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; padding-left: 0"><FONT STYLE="font-size: 8pt">Grant<BR>

    Date</FONT></TD><TD STYLE="padding-bottom: 1pt; padding-left: 0"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; padding-left: 0"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Number
                                         of</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Securities</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Underlying</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Unexercised</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Options</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>(#)</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Exercisable</B></FONT></P></TD><TD STYLE="padding-bottom: 1pt; padding-left: 0"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; padding-left: 0"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; padding-left: 0"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Number
                                         of</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Securities</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Underlying</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Unexercised</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Options</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>(#)(1)</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Unexercisable</B></FONT></P></TD><TD STYLE="padding-bottom: 1pt; padding-left: 0"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; padding-left: 0"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; padding-left: 0"><FONT STYLE="font-size: 8pt">Option<BR>
    Exercise <BR>
    Price ($)</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; padding-left: 0"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; padding-left: 0"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; padding-left: 0"><FONT STYLE="font-size: 8pt">Option
    <BR>
    Expiration <BR>
    Date</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 16%; text-align: left; padding-left: 0">Dennis Shields</TD><TD STYLE="width: 1%; padding-left: 0">&nbsp;</TD>
    <TD STYLE="width: 16%; padding-left: 0">06/28/2007</TD><TD STYLE="width: 1%; padding-left: 0">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="width: 14%; text-align: right; padding-left: 0">13,500</TD><TD STYLE="width: 1%; text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="width: 1%; font-family: Symbol; padding-left: 0">&nbsp;</TD>
    <TD STYLE="width: 1%; font-family: Symbol; text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="width: 14%; font-family: Symbol; text-align: right; padding-left: 0"><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="width: 1%; font-family: Symbol; text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="width: 1%; padding-left: 0">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="width: 14%; text-align: right; padding-left: 0">10.00</TD><TD STYLE="width: 1%; text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="width: 1%; padding-left: 0">&nbsp;</TD>
    <TD STYLE="width: 15%; padding-left: 0">06/28/2017</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">08/01/2014</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">4,000</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">6,000</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">12.50</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">08/01/2024</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">09/01/2015</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">28,456</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">113,823</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">12.50</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">09/01/2025</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">09/01/2016</TD><TD STYLE="font-family: Symbol; padding-left: 0">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="font-family: Symbol; text-align: right; padding-left: 0"><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="font-family: Symbol; text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">101,500</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">12.50</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">09/01/2026</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0">Andrew C. Sagliocca</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">06/28/2007</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">25,000</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="font-family: Symbol; padding-left: 0">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="font-family: Symbol; text-align: right; padding-left: 0"><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="font-family: Symbol; text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">10.00</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">06/28/2017</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">01/04/2010</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">27,000</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="font-family: Symbol; padding-left: 0">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="font-family: Symbol; text-align: right; padding-left: 0"><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="font-family: Symbol; text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">12.50</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">01/04/2020</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">08/01/2014</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">4,000</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">6,000</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">12.50</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">08/01/2024</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">09/01/2015</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">5,335</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">21,342</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">12.50</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">09/01/2025</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">09/01/2016</TD><TD STYLE="font-family: Symbol; padding-left: 0">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="font-family: Symbol; text-align: right; padding-left: 0"><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="font-family: Symbol; text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">58,250</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">12.50</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">09/01/2026</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0">Eric S. Bader</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">02/01/2008</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">5,000</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="font-family: Symbol; padding-left: 0">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="font-family: Symbol; text-align: right; padding-left: 0"><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="font-family: Symbol; text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">10.00</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">02/01/2018</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">01/04/2010</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">20,000</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="font-family: Symbol; padding-left: 0">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="font-family: Symbol; text-align: right; padding-left: 0"><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="font-family: Symbol; text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">12.50</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">01/04/2020</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">08/01/2014</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">2,620</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">3,930</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">12.50</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">08/01/2024</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">09/01/2015</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">3,557</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">14,228</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">12.50</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">09/01/2025</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">09/01/2016</TD><TD STYLE="font-family: Symbol; padding-left: 0">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="font-family: Symbol; text-align: right; padding-left: 0"><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="font-family: Symbol; text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">29,125</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">12.50</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">09/01/2026</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0">Ari P. Kornhaber</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">08/01/2014</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">4,000</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">6,000</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">12.50</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">08/01/2024</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">09/01/2015</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">1,778</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">7,114</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">12.50</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">09/01/2025</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">05/02/2016</TD><TD STYLE="font-family: Symbol; padding-left: 0">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="font-family: Symbol; text-align: right; padding-left: 0"><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="font-family: Symbol; text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">7,500</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">12.50</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">05/02/2026</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">09/01/2016</TD><TD STYLE="font-family: Symbol; padding-left: 0">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="font-family: Symbol; text-align: right; padding-left: 0"><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="font-family: Symbol; text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">29,125</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="text-align: right; padding-left: 0">12.50</TD><TD STYLE="text-align: left; padding-left: 0">&nbsp;</TD><TD STYLE="padding-left: 0">&nbsp;</TD>
    <TD STYLE="padding-left: 0">09/01/2026</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0; margin-bottom: 0pt; text-align: left">&nbsp;</P>

<!-- Field: Rule-Page --><DIV ALIGN="LEFT" STYLE="margin-top: 0; margin-bottom: 0"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 25%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0; margin-bottom: 0pt; text-align: left"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(1)</TD><TD STYLE="text-align: left">All awards vest in 20% increments on the first, second, third, fourth and fifth anniversary of the
date of grant.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


<!-- Field: Page; Sequence: 110; Value: 58 -->
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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><A HREF="#TableOfContents">Table of Contents</A>&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><B>Director Compensation
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">The following table sets
forth for the year ended December&nbsp;31, 2016 certain information as to total compensation paid to non-employee directors. Messrs.
Shields and Sagliocca do not receive any additional compensation for service on our board of directors and Esquire Bank&rsquo;s
board of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Name</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Fees
                                         Earned </B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>or</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Paid
                                         in Cash</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>($)</B></FONT></P></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Stock</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Awards</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>($)</B></FONT></P></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Option</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Awards</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>($)(1)(2)</B></FONT></P></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>($)</B></FONT></P></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 48%; text-align: left">Anthony Coelho</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">18,250</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-family: Symbol">&nbsp;</TD>
    <TD STYLE="width: 1%; font-family: Symbol; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; font-family: Symbol; text-align: right"><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="width: 1%; font-family: Symbol; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">72,200</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">90,450</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Todd Deutsch</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">28,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol; text-align: right"><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;</FONT><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">28,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Marc Grossman</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,750</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol; text-align: right"><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">27,075</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">36,825</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Russ M. Herman</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol; text-align: right"><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">72,200</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">97,700</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Janet Hill</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol; text-align: right"><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">27,075</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">34,575</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Robert J. Mitzman</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,750</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol; text-align: right"><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">72,200</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">81,950</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">John Morgan</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,750</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol; text-align: right"><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">27,075</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">33,825</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Richard T. Powers</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">32,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol; text-align: right"><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;</FONT><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">32,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Jack Thompson (3)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol; text-align: right"><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;</FONT><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,500</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Kevin C. Waterhouse</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">29,250</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol; text-align: right"><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,025</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38,275</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Selig Zises</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">33,750</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD STYLE="font-family: Symbol; text-align: right"><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="font-family: Symbol; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&#9;</FONT><FONT STYLE="font: 10pt Symbol">&frac34;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">33,750</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(1)</TD><TD>These amounts represent the aggregate grant date fair value for
                                         outstanding stock option awards granted during the year indicated, computed in accordance
                                         with FASB ASC Topic 718. The assumptions used to determine the value of stock options
                                         are described in Note 4 of the Notes to the Interim Condensed Consolidated Financial
                                         Statements and see Note 9 of the Notes to the Consolidated Financial Statements.
                                         The actual value, if any, realized by a director from any option will depend on the extent
                                         to which the market value of the common stock exceeds the exercise price of the option
                                         on the date the option is exercised. Accordingly, there is no assurance that the value
                                         realized by a director will be at or near the value shown above.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(2)</TD><TD><FONT STYLE="background-color: white">At December 31, 2016, Messrs. Coelho, Deutsch, Herman, Mitzman, Powers, Waterhouse and
Zises held 42,231, 20,000, 49,231, 51,231, 59,778, 20,392 and 66,801 outstanding stock options, respectively.</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(3)</TD><TD><FONT STYLE="background-color: white">Mr. </FONT>Thompson <FONT STYLE="background-color: white">was appointed to the board
of directors of the Company and Esquire Bank effective September 2016.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><B>Director Fees </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">Board members of the Company
receive fees for board and committee meetings attended in person. Board members receive $1,500 for each Board meeting, $750 for
each telephonic Board Meeting, and $1,000 for each committee meeting attended.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_014"></A>CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition to the compensation arrangements
with directors and executive officers described in &ldquo;Executive Compensation&rdquo; above, the following is a description of
transactions since January 1, 2016, to which we have been a party in which the amount involved exceeded or will exceed $120,000,
and in which any of our directors, executive officers or beneficial holders of more than five percent of our capital stock, or
their immediate family members or entities affiliated with them, had or will have a direct or indirect material interest.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Policies and Procedures Regarding Related Party Transactions</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Transactions by the Company or Esquire Bank
with related parties are subject to certain regulatory requirements and restrictions, including Sections 23A and 23B of the Federal
Reserve Act (which govern certain transactions by Esquire Bank with its affiliates) and the Federal Reserve's Regulation&nbsp;O
(which governs certain loans by Esquire Bank to its executive officers, directors and principal stockholders).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Under applicable SEC and NASDAQ rules, related
party transactions are transactions in which we are a participant, the amount involved exceeds $120,000 and a related party has
or will have a direct or indirect material interest. Related parties of the Company include directors (including nominees for election
as directors), executive officers, five percent stockholders and the immediate family members of these persons. Related party transactions
will be referred for approval or ratification to our audit committee. In determining whether to approve a related party transaction,
the Audit Committee will consider, among other factors, the fairness of the proposed transaction, the direct or indirect nature
of the related party's interest in the transaction, the appearance of an improper conflict of interests for any director or executive
officer taking into account the size of the transaction and the financial position of the related party, whether the transaction
would impair an outside director's independence, the acceptability of the transaction to our regulators and the potential violations
of other corporate policies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Banking Relationships</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On September 30, 2016, the Company purchased
a $265,000 participation interest (53%) in a loan that was originated by an entity in which Dennis Shields, a director and executive
officer of the Company, is a principal stockholder. The underlying loan was for the working capital needs of a law firm. The purchase
of the loan participation was approved by our Directors Loan Committee and our Corporate Governance Committee, without the participation
or vote of Mr. Shields. The loan and the Company&rsquo;s participation therein has been repaid in full prior to December 31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In 2016, Esquire Bank made a $500,000 loan
to a third-party borrower the proceeds of which were used to lend additional monies to a limited liability company controlled by
Plaintiff Funding Holding, Inc. (DBA LawCash). Mr. Zises, a director of the Company, and Mr. Shields, an executive officer and
a director of the Company, are each principal stockholders of LawCash, and Mr. Shields is the Chief Executive Officer of LawCash.
The loan was made in the ordinary course of business, on substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable transactions with others, and in the opinion of management does not involve more
than a normal risk of collectability, nor does it present other unfavorable features. The loan was approved by the Directors Loan
Committee and Corporate Governance Committee, without participation or vote of Messrs. Shields or Zises. As of March 31, 2017,
the loan was being paid as agreed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We have engaged, and expect to engage in
the future, in banking transactions in the ordinary course of business with directors, officers, principal stockholders and their
associates and/or immediate family members, on substantially the same terms, including interest rates and collateral on loans,
as those prevailing at the same time for comparable transactions with persons not related to us and that do not involve more than
the normal risk of collectability or present other unfavorable features.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">At March 31, 2017, the aggregate amount
of extensions of credit to our directors, executive officers, principal stockholders and their associates was $7.2 million, or
approximately 13.5% of our total equity. At March 31, 2017, unfunded commitments totaled $60,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_015"></A>PRINCIPAL AND SELLING STOCKHOLDERS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table sets forth information
as of May 23, 2017 regarding the beneficial ownership of our common stock, and as adjusted to reflect the completion of this offering:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>each stockholder known by us to beneficially own more than 5% of our outstanding common stock;&nbsp;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>each of our directors;&nbsp;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>each of our named executive officers;&nbsp;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>all of our directors and executive officers as a group; and&nbsp;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>each selling stockholder.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We have determined beneficial ownership
in accordance with the rules of the SEC. These rules generally provide that a person is the beneficial owner of securities if such
person has or shares the power to vote or direct the voting of securities, or to dispose or direct the disposition of securities,
or has the right to acquire such powers within 60 days. For purposes of calculating each person's percentage ownership, common
stock issuable pursuant to options exercisable within 60 days are included as outstanding and beneficially owned for that person
or group, but are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Except as
disclosed in the footnotes to this table and subject to applicable community property laws, we believe that each person identified
in the table has sole voting and investment power over all of the shares shown opposite such person's name.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The percentage of beneficial ownership is
based on 5,057,030 shares of our common stock outstanding as of May 23, 2017 and [<FONT STYLE="font-family: Symbol">&middot;</FONT>]
shares to be outstanding after the completion of this offering (or [<FONT STYLE="font-family: Symbol">&middot;</FONT>] shares if
the underwriter exercises its purchase option in full), in each case including [<FONT STYLE="font-family: Symbol">&middot;</FONT>]
shares of restricted stock awarded under our stock incentive plan but not vested as of such date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Unless otherwise indicated, the address
for each listed stockholder is: c/o Esquire Financial Holdings, Inc., 100 Jericho Quadrangle, Suite 100, Jericho, New York 11753.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Shares
                                         Beneficially Owned as of </B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>May
                                         23, 2017</B></FONT></P></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="10" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Shares
                                         Beneficially Owned</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>After
                                         the Offering</B></FONT></P></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Name
    and Address of <BR>
    Beneficial Owner</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Number
    of Shares</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"><SUP>&nbsp;</SUP></FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Percent</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Shares</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>to
                                         be</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Sold
                                         in</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>the</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Offering</B></FONT></P></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Number
                                         of</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Shares<SUP>(7)</SUP></B></FONT></P></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Percent,</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>assuming
                                         no</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>exercise
                                         of</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>underwriter&rsquo;s</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>purchase</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>option</B></FONT></P></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>Percent,</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>assuming
                                         full</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>exercise
                                         of</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>underwriter&rsquo;s</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>purchase</B></FONT></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 8pt"><B>option</B></FONT></P></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold">Directors:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 22%; text-align: left">Dennis Shields</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">156,356</TD><TD STYLE="width: 1%; text-align: left"><SUP>(1)</SUP></TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">3.1</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: 0in">Selig A. Zises</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">242,480</TD><TD STYLE="text-align: left"><SUP>(2)</SUP></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.8</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Todd Deutsch</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">44,000</TD><TD STYLE="text-align: left"><SUP>(3)</SUP></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">*</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">John Morgan</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">63,380</TD><TD STYLE="text-align: left"><SUP>(4)</SUP></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.3</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Russ M. Herman</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">51,466</TD><TD STYLE="text-align: left"><SUP>(5)</SUP></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.0</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Robert J. Mitzman</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">83,208</TD><TD STYLE="text-align: left"><SUP>(6)</SUP></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.6</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Kevin C. Waterhouse</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">104,378</TD><TD STYLE="text-align: left"><SUP>(7)</SUP></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.1</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Marc Grossman</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,000</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">*</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Janet Hill</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">80</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">*</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Richard T. Powers</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">62,356</TD><TD STYLE="text-align: left"><SUP>(8)</SUP></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.2</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Anthony Coelho</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">44,446</TD><TD STYLE="text-align: left"><SUP>(9)</SUP></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">*</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Andrew C. Sagliocca</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">86,335</TD><TD STYLE="text-align: left"><SUP>(10)</SUP></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.7</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Jack Thompson</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">497,895</TD><TD STYLE="text-align: left"><SUP>(11)</SUP></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.8</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: 0in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Named Executive Officers (not identified above):</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Eric S. Bader</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31,177</TD><TD STYLE="text-align: left"><SUP>(12)</SUP></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">*</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Ari P. Kornhaber</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,278</TD><TD STYLE="text-align: left"><SUP>(13)</SUP></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">*</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">All directors and executive officers as a group (15 persons total)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,487,835</TD><TD STYLE="text-align: left"><SUP>&nbsp;</SUP></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">28.2</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><A HREF="#TableOfContents">Table of Contents</A>&nbsp;</DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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    <TD STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold">5% Stockholders:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 22%; text-align: left">CJA Private Equity Financial Restructuring Master Fund I, LP <BR>c/o Gapstow Capital Partners <BR>654 Madison Avenue, Suite 601 <BR>New York, New York 10065</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">497,815</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">9.8</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Wolfson Equities, LLC <BR>One State St. Plaza <BR>New York, New York 10004</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">320,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6.3</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Selling Stockholders:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">[</FONT><FONT STYLE="font: 10pt Symbol">&middot;</FONT><FONT STYLE="font: 10pt Times New Roman, Times, Serif">]</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">*</TD><TD STYLE="text-align: justify">Less than 1%</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><SUP>(1)</SUP></TD><TD STYLE="text-align: left">Includes presently exercisable options to purchase 45,956 shares of the Company&rsquo;s common stock.
Mr. Shields has sole voting and investment power over 93,400 shares and shared voting and investment power over 12,000 shares.
Mr. Shields&rsquo; wife has sole voting and investment power over 5,000 shares.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><SUP>(2)</SUP></TD><TD STYLE="text-align: left">Includes presently exercisable options to purchase<FONT STYLE="color: red"> </FONT>20,560 shares of
the Company&rsquo;s common stock.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><SUP>(3)</SUP></TD><TD STYLE="text-align: left">Includes presently exercisable options to purchase<FONT STYLE="color: red"> </FONT>4,000 shares of
the Company&rsquo;s common stock. Mr. Deutsch has sole voting and investment power over 40,000 shares.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><SUP>(4)</SUP></TD><TD STYLE="text-align: left">Mr. Morgan has sole voting and investment power over 80 shares and shared voting and investment power
over 63,300 shares.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><SUP>(5)</SUP></TD><TD STYLE="text-align: left">Includes presently exercisable options to purchase 11,446 shares of the Company&rsquo;s common stock.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><SUP>(6)</SUP></TD><TD STYLE="text-align: left">Includes presently exercisable options to purchase<FONT STYLE="color: red"> </FONT>13,446 shares of
the Company&rsquo;s common stock. Mr. Mitzman has sole voting and investment power over 64,762 shares and shared voting and investment
power over 5,000 shares.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><SUP>(7)</SUP></TD><TD STYLE="text-align: left">Includes presently exercisable options to purchase<FONT STYLE="color: red"> </FONT>10,778 shares of
the Company&rsquo;s common stock. Mr. Waterhouse has sole voting and investment power over 18,000 shares and shared voting and
investment power over 75,600 shares.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><SUP>(8)</SUP></TD><TD STYLE="text-align: left">Includes presently exercisable options to purchase 4,356 shares of the Company&rsquo;s common stock.
Mr. Powers has shared voting and investment power over 58,000 shares.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><SUP>(9)</SUP></TD><TD STYLE="text-align: left">Includes presently exercisable options to purchase<FONT STYLE="color: red"> </FONT>4,446 shares of
the Company&rsquo;s common stock. Mr. Coelho has shared voting and investment power over 40,000 shares.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><SUP>(10)</SUP></TD><TD STYLE="text-align: left">Includes presently exercisable options to purchase<FONT STYLE="color: red"> </FONT>61,335 shares of
the Company&rsquo;s common stock. Mr. Sagliocca has sole voting and investment power over 4,000 shares and shared voting and investment
power over 21,000 shares.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><SUP>(11)</SUP></TD><TD STYLE="text-align: left">Mr. Thompson has sole voting and investment power over 80 shares. Mr. Thompson is a member of CJA
Private Equity Financial Restructuring GP I Ltd., the general partner of CJA Private Equity Financial Restructuring Master Fund
I, LP, which holds an additional 497,815 shares of the Company&rsquo;s common stock and 66,985 shares of the Company&rsquo;s Series
B Preferred Stock. CJA Private Equity Financial Restructuring GP I Ltd. has designated all voting rights to CJA Private Equity
Financial Restructuring Master Fund I, LP&rsquo;s Investment Manager, Gapstow Capital Partners. Mr. Thompson is an employee of
Gapstow Capital Partners.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><SUP>(12)</SUP></TD><TD STYLE="text-align: left">Includes presently exercisable options to purchase<FONT STYLE="color: red"> </FONT>31,177 shares of
the Company&rsquo;s common stock.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><SUP>(13)</SUP></TD><TD STYLE="text-align: left">Includes presently exercisable options to purchase 5,778 shares of the Company&rsquo;s common stock
and options exercisable within 60 days to purchase 1,500 shares of the Company&rsquo;s common stock.</TD></TR></TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_016"></A>DESCRIPTION OF CAPITAL STOCK</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>The following is a summary of the material
rights of our capital stock and related provisions of our articles of incorporation and bylaws. This discussion may not contain
all of the information regarding our capital stock that is important to you. Reference is made to the more detailed provisions
of our articles of incorporation and bylaws, copies of which are filed with the SEC as exhibits to the registration statement of
which this prospectus is a part.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>General</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Our
authorized capital consists of 15,000,000 shares of common stock, $0.01 par value, and 2,000,000 shares of preferred stock, $0.01
par value. At March 31, 2017, there were 5,003,030 shares of common stock outstanding and 66,985 shares of our Series B Preferred
Stock outstanding. All issued and outstanding shares at that date were, and the shares of common stock to be issued upon completion
of this offering will be, fully paid and nonassessable. Immediately following the completion of this offering, we will have </FONT>[<FONT STYLE="font-family: Symbol">&middot;</FONT>]
<FONT STYLE="font-family: Times New Roman, Times, Serif">shares of common stock outstanding (assuming the underwriter does not
exercise its option to purchase any additional shares) and 66,985 shares of Series B Preferred Stock outstanding. Also, as of </FONT>[<FONT STYLE="font-family: Symbol">&middot;</FONT>]<FONT STYLE="font-family: Times New Roman, Times, Serif">,
options to purchase </FONT>[<FONT STYLE="font-family: Symbol">&middot;</FONT>] <FONT STYLE="font-family: Times New Roman, Times, Serif">shares
of our common stock held by our employees, officers and directors under our 2007 Stock Option Plan and our 2011 Stock Compensation
Plan were outstanding.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Common Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Voting Rights. </I></B>All voting
rights are vested in the holders of our common stock, subject to the issuance of preferred stock with voting rights. Any issuance
by our preferred stock with voting rights following the offering may affect the voting rights of the holders of common stock. Except
as discussed below in &ldquo;&mdash;Restrictions on Acquisition of Esquire Financial Holdings,&rdquo; each holder of common stock
will be entitled to one vote per share. Holders of our common stock are not entitled to cumulate their votes in the election of
directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-size: 10pt"><B><I>Dividends.</I></B></FONT>
<FONT STYLE="font-size: 10pt">Holders of our common stock will be entitled to receive and share equally in such dividends as the
board of directors of the Company may declare out of funds legally available for such payments. If the Company issues preferred
stock following the offering, holders of such stock may have a priority over holders of common stock with respect to the payment
of dividends. We may pay dividends to an amount equal to the excess of our capital surplus over payments that would be owed upon
dissolution to stockholders whose preferential rights upon dissolution are superior to those receiving the dividend, and to an
amount that would not make us insolvent, as and when declared by our board of directors. The holders of common stock of the Company
will be entitled to receive and share equally in dividends as may be declared by our board of directors out of funds legally available
therefor. If the Company issues additional shares of preferred stock, the holders thereof may have a priority over the holders
of the common stock with respect to dividends.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Liquidation or Dissolution.</I></B>
In the event of a liquidation or dissolution of the Company, holders of our common stock and any participating preferred stock
will be entitled to receive, after payment or provision for payment of all of our debts and liabilities and the preferential rights
of, and the payment of liquidation preferences, if any, on any outstanding shares of preferred stock, all of our assets available
for distribution. If we issue preferred stock following the offering, holders of such stock may have a senior interest over holders
of common stock in such a distribution.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>No Preemptive or Redemption Rights.
</I></B>Holders of our common stock will not have any preemptive rights or redemption rights with respect to any shares of our
capital stock that may be issued. Certain of our stockholders are parties to subscription agreements with the Company in connection
with previous private placement offerings that provide those stockholders with preemptive rights to purchase securities issued
by the Company. However, such preemptive rights do not apply to this offering and will terminate upon completion of this offering.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Exchange Rights. </I></B>We have agreed
to provide the holder of our Series B Preferred Stock with the right to exchange its shares of common stock for additional shares
of preferred stock in order to reduce its beneficial ownership of voting common stock to 4.95% of the Company&rsquo;s total outstanding
voting common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-size: 10pt"><B><I>Registration
Rights.</I></B> We have agreed to provide the holder of our Series B Preferred Stock with the right to include its common shares
in a registration statement that we are otherwise filing. The &ldquo;piggyback&rdquo; registration rights granted to the holder
of our Series B Preferred Stock will apply at the time of this offering. <B> </B>Following our initial public offering, to the
extent the holder of our Series B Preferred Stock remains a holder of our common stock or our Series B Preferred Stock, it may
exercise its &ldquo;piggyback&rdquo; registration rights in connection with future offerings of our common stock, other than registration
statements filed on Forms&nbsp;S-4 or</FONT>&nbsp;<FONT STYLE="font-size: 10pt">S-8.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Preferred Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">None of the shares of the Company&rsquo;s
authorized preferred stock will be issued as part of the offering. Preferred stock may be issued with preferences and designations
as our board of directors may from time to time determine. Our board of directors may, without stockholder approval, issue shares
of preferred stock with voting, dividend, liquidation and conversion rights that could dilute the voting strength of the holders
of the common stock and may assist management in impeding an unfriendly takeover or attempted change in control.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Series B Preferred Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Voting Rights.</I></B> The holder
of our Series B Preferred Stock has no voting rights, except as may be provided for under the MGCL.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Dividends.</I></B> The holder of our
Series B Preferred Stock is entitled to receive ratable dividends when dividends are concurrently declared and payable on the shares
of common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Liquidation or Dissolution.</I></B>
In the event of any liquidation, dissolution or winding up of the affairs of the Company, the assets of the Company or proceeds
thereof (whether capital or surplus) remaining available for distribution to stockholders of the Company after payment in full
of all claims of creditors of the Company and all amounts due on any preferred stock or other securities of the Company that are
superior and prior in rank to the common stock and the Series&nbsp;B Preferred Stock will be distributed to the holders of the
common stock and the Series B Preferred Stock pro rata based, respectively, on the number of shares of common stock outstanding
at such time and the number of shares of common stock into which the Series B Preferred Stock outstanding at such time is then
convertible.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Preemptive or Redemption Rights</I></B>.
The holder of our Series B Preferred Stock currently has preemptive rights that allow such stockholder to maintain its percentage
ownership in our common stock in the event the Company issues any additional common shares in a subsequent offering. However, such
preemptive rights do not apply to this offering and will terminate upon completion of this offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Conversion and Transfer Rights. </I></B>The
shares of Series B Preferred Stock are not convertible into common stock by the holder or any affiliate of such holder and may
only be transferred by the holder or such affiliate (i) to an affiliate of such holder, (ii) to the Company, (iii) in a widespread
public distribution, (iv) in a transfer in which no transferee (or group of associated transferees) would receive 2% or more of
any class of voting securities of the Company, or (v) to a transferee that would control more than 50% of the voting securities
of the Corporation without any transfer from the initial holder or any affiliate of such initial holder.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">However, we may agree to permit the holder
of our Series B Preferred Stock to exchange shares of preferred stock for shares of our common stock in order to allow it to maintain
its percent ownership of the outstanding common stock of the Company. Additionally, if at any time any Series B Preferred Stock
held by the holder are transferred to any person other than an affiliate of the holder pursuant to either: (i) in a widespread
public distribution; (ii) a transfer in which no transferee (or group of associated transferees) would receive 2% or more of any
class of voting securities of the Company; or (iii) a transferee that would control more than 50% of the voting securities of the
Company without any transfer from the initial holder or any affiliate of such initial holder, such shares would immediately and
without further action on the part of any person convert automatically to common shares, on a one for one basis, subject to compliance
with the requirements of any federal banking regulators with respect to restrictions on the transfer of non-voting shares.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition, the holder of our Series B
Preferred Stock has the right to exchange its shares of common stock for additional shares of preferred stock in order to reduce
its ownership of voting common stock to 4.95% of the Company&rsquo;s total outstanding voting common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-size: 10pt"><B><I>Registration
Rights.</I></B> We have agreed to provide the holder of our Series B Preferred Stock with the right to include its common or preferred
shares in a registration statement that we are otherwise filing. The &ldquo;piggyback&rdquo; registration rights granted to the
holder of our Series B Preferred Stock will apply at the time of this offering.<B> </B>Following our initial public offering, to
the extent the holder of our Series B Preferred Stock remains a holder of our common stock or our Series B Preferred Stock, it
may exercise its &ldquo;piggyback&rdquo; registration rights in connection with future offerings of our common stock, other than
registration statements filed on Forms&nbsp;S-4 or</FONT>&nbsp;<FONT STYLE="font-size: 10pt">S-8.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Restrictions on Acquisition of Esquire Financial Holdings</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following is a general summary of the
material provisions of our Articles of Incorporation and Bylaws and the MGCL that may have an &ldquo;anti-takeover effect.&rdquo;
Such provisions might discourage future takeover attempts by impeding efforts to acquire us or stock purchases in furtherance of
such an acquisition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Authorized Shares of Capital Stock.</I></B>&nbsp;Our
Articles of Incorporation authorizes the issuance of up to 15,000,000 shares of common stock, $0.01 par value, and 2,000,000 shares
of preferred stock, $0.01 par value. Shares of preferred stock with voting rights could be issued and would then represent an additional
class of stock required to approve any proposed acquisition. This preferred stock, together with authorized but unissued shares
of our common stock, could represent additional capital required to be purchased by an acquiror. Issuance of such additional shares
may also dilute the voting interest of our stockholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Generally, Esquire Financial Holdings is
authorized to issue preferred stock from time to time in one or more series subject to applicable provisions of law, and the board
of directors is authorized to fix the designations, and relative preferences, limitations, voting rights, if any, including without
limitation, offering rights of such shares (which could be multiple or as a separate class). In the event of a proposed merger,
tender offer or other attempt to gain control of the Company that the board of directors does not approve, it may be possible for
the board of directors to authorize the issuance of a series of preferred stock with rights and preferences that would impede the
completion of the transaction. An effect of the possible issuance of preferred stock therefore may be to deter a future attempt
to gain control of the Company. The board of directors has no present plan or understanding to issue any preferred stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Directors.</I></B> The Board of Directors
is classified into three classes, one of which is elected each year for a three year term. Also, for so long as CJA Private Equity
Financial Restructuring Master Fund I, LP beneficially owns at least 4.0% of the total outstanding capital stock of Esquire Financial
Holdings, Esquire Financial Holdings shall use its reasonable best efforts to cause one person nominated by CJA Private Equity
Financial Restructuring Master Fund I, LP to be elected to serve on the Board of Directors of Esquire Financial Holdings and Esquire
Bank. A director may be removed from office at any time, for any reason by the majority vote of the holders of the then-outstanding
capital stock of Esquire Financial Holdings entitled to vote generally in the election of directors voting together as a single
class. These provisions may make it more difficult to remove a director, and may it more difficult for an acquiror to acquire control
of the company without negotiating with the Board of Directors, and may therefore have an anti-takeover effect.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Actions by Stockholders.</I></B> Our
Bylaws provide that special meetings of the stockholders may be called only by a majority of the board of directors, the President,
or the Secretary at the written request of the holders of at least a majority of all shares entitled to vote.&nbsp;The Bylaws provide
that notice of stockholder proposals for new business to be considered at an annual meeting must be submitted, in general, not
less than ten or more than 90 days before the meeting.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In general, our Articles of Incorporation
may be amended in the manner prescribed under Maryland law. The Board of Directors may amend the Articles of Incorporation, without
further stockholder action, to increase or decrease the aggregate number of shares of stock or the number of shares of stock of
any class or series that Esquire Financial Holdings has authority to issue. No proposed amendment or repeal of any provision of
the Articles of Incorporation may be submitted to stockholders unless the Board of Directors has (1) approved the proposed amendment
or repeal, (2) determined that it is advisable, and (3) directed that it be submitted for consideration at either an annual or
special meeting of stockholders. The amendment or repeal of any provision of the Articles of Incorporation shall be approved by
at least a majority vote.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Limitation of Director and Officer
Liability; Indemnification. </I></B>As permitted by the MGCL, our Articles of Incorporation eliminate the liability of directors
and officers to Esquire Financial Holdings or its stockholders to the fullest extent permitted by law. The MGCL provides that the
liability of a director or officer in a proceeding brought by or in the right of stockholders, or on behalf of stockholders may
be eliminated, except that the liability of a director or officer may not be eliminated if the officer or director received an
improper benefit or profit, or if a judgment against the director or officer is based on a finding that such person&rsquo;s action
or failure to act was the result of active and deliberate dishonesty and was material to the cause of action against such person.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our Articles of Incorporation provide that
to the full extent permitted by the MGCL and other applicable law, Esquire Financial Holdings shall indemnify a director or officer
who is or was a party to any proceeding by reason of the fact that he is or was such a director or officer, and the Board of Directors
may contract in advance to indemnify any director or officer. The MGCL provides that except as limited by its articles of incorporation,
a corporation shall indemnify a director who entirely prevails in the defense of any proceeding to which he was a party because
he is or was a director of the corporation against reasonable expenses incurred in connection with the proceeding. The MGCL further
provides that a corporation may indemnify an individual made a party to a proceeding because he is or was a director against liability
incurred in the proceeding unless (i) the act or omission was material to the matter giving rise to the proceeding and was committed
in bad faith or was the result of active and deliberate dishonesty; (ii) the director actually received an improper personal benefit;
or (iii) in the case of any criminal proceeding, the director had reasonable cause to believe the act or omission was unlawful,
provided however, that if the proceeding was by or in the right of the corporation, no indemnification may be made if the director
is adjudged liable to the corporation. The Board of Directors may also indemnify an employee or agent of the corporation who was
or is a party to any proceeding by reason of the fact that he is or was an employee or agent of the corporation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-size: 10pt"><B><I>Dissenters&rsquo;
Rights of Appraisal.</I></B></FONT>&nbsp;<FONT STYLE="font-size: 10pt">&nbsp;Under our Articles of Incorporation, stockholders
of the Company will not have dissenters&rsquo; appraisal rights in connection with a plan of merger or consolidation to which the
Company is a party.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Listing and Trading</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our common stock is currently not listed
on any securities exchange. We have applied to have our common stock approved for listing on the NASDAQ Capital Market under the
symbol &ldquo;ESQ.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Transfer Agent and Registrar</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The transfer agent and registrar for our
common stock is American Stock Transfer &amp; Trust Company, LLC.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_017"></A>SHARES ELIGIBLE FOR FUTURE SALE</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Prior to this offering, there has been no
established public market for our common stock. Future sales of substantial amounts of our common stock in the public market, or
the perception that such sales may occur, could adversely affect market prices prevailing from time to time. Furthermore, because
only a limited number of shares will be available for sale shortly after this offering due to existing contractual and legal restrictions
on resale as described below, there may be sales of substantial amounts of our common stock in the public market after the restrictions
lapse. This may adversely affect the prevailing market price and our ability to raise equity capital in the future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Upon
completion of this offering, we will have </FONT>[<FONT STYLE="font-family: Symbol">&middot;</FONT>] <FONT STYLE="font-family: Times New Roman, Times, Serif">shares
of common stock outstanding. Of these shares, </FONT>[<FONT STYLE="font-family: Symbol">&middot;</FONT>] <FONT STYLE="font-family: Times New Roman, Times, Serif">shares
of our common stock (or </FONT>[<FONT STYLE="font-family: Symbol">&middot;</FONT>] <FONT STYLE="font-family: Times New Roman, Times, Serif">shares
if the underwriter exercises its purchase option in full) sold in this offering will be freely transferable without restriction
or further registration under the Securities Act, except for any shares purchased by our &ldquo;affiliates,&rdquo; as that term
is defined in Rule&nbsp;144 under the Securities Act. The remaining </FONT>[<FONT STYLE="font-family: Symbol">&middot;</FONT>]
<FONT STYLE="font-family: Times New Roman, Times, Serif">shares of our common stock (or </FONT>[<FONT STYLE="font-family: Symbol">&middot;</FONT>]
<FONT STYLE="font-family: Times New Roman, Times, Serif">shares if the underwriter exercises its purchase option in full) outstanding
are &ldquo;restricted shares&rdquo; as defined in Rule 144. Restricted shares may be sold in the public market only if registered
under the Securities Act or if they qualify for an exemption from registration under Rule 144. As a result of the contractual 180-day
lock-up period described below, </FONT>[<FONT STYLE="font-family: Symbol">&middot;</FONT>]<FONT STYLE="font-family: Times New Roman, Times, Serif">
of these shares will be available for sale in the public market only after 180 days from the date of this prospectus (generally
subject to volume and other offering limitations).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Rule 144</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In general, a person who has beneficially
owned restricted shares of our common stock for at least six months would be entitled to sell such securities, provided that (i)
such person is not deemed to have been one of our affiliates at the time of, or at any time during the 90 days preceding, the sale
and (ii) we are subject to the Exchange Act periodic reporting requirements for at least 90 days before the sale. Persons who have
beneficially owned restricted shares of our common stock for at least six months but who are our affiliates at the time of, or
any time during the 90 days preceding, the sale, would be subject to additional restrictions, by which such person would be entitled
to sell within any three-month period only a number of securities that does not exceed the greater of the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font: 10pt Symbol">&middot;</FONT></TD><TD><FONT STYLE="font: 10pt Times New Roman, Times, Serif">1% of the number of shares of our common stock then
outstanding, which will equal approximately </FONT><FONT STYLE="font-size: 10pt">[</FONT><FONT STYLE="font-family: Symbol">&middot;</FONT><FONT STYLE="font-size: 10pt">]
<FONT STYLE="font-family: Times New Roman, Times, Serif">shares immediately after this offering (or approximately </FONT>[</FONT><FONT STYLE="font-family: Symbol">&middot;</FONT><FONT STYLE="font-size: 10pt">]
<FONT STYLE="font-family: Times New Roman, Times, Serif">shares if the underwriter exercises its purchase option in full); or</FONT></FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">the average weekly trading volume of our common stock on the NASDAQ
Capital Market during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">provided, in each case, that we are subject to the Exchange
Act periodic reporting requirements for at least 90 days before the sale. Such sales both by affiliates and by non-affiliates must
also comply with the manner of sale and notice provisions of Rule&nbsp;144 to the extent applicable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Registration Rights </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-size: 10pt">We have agreed
to provide the holder of our Series B Preferred Shares with the right to include its common or preferred shares in a registration
statement that we are otherwise filing. The &ldquo;piggyback&rdquo; registration rights granted to the holder of our Series B Preferred
Shares will apply at the time of this offering.<B> </B>Following our initial public offering, to the extent the holder of our Series
B Preferred Shares remains a holder of our common stock or our Series B Preferred Shares, it may exercise its &ldquo;piggyback&rdquo;
registration rights in connection with future offerings of our common stock, other than registration statements filed on Forms&nbsp;S-4
or</FONT>&nbsp;<FONT STYLE="font-size: 10pt">S-8.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Registration Statement on Form&nbsp;S-8 </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">In
connection with or as soon as practicable following the completion of this offering, we intend to file&nbsp;a registration statement
with the SEC on Form S-8 to register an aggregate of approximately </FONT>[<FONT STYLE="font-family: Symbol">&middot;</FONT>] <FONT STYLE="font-family: Times New Roman, Times, Serif">shares
of our common stock reserved for future issuance under our equity incentive plans, as described further under &ldquo;Executive
Compensation&mdash;Incentive Compensation Plans.&rdquo; That registration statement will become effective upon filing and</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif">shares
of common stock covered by such registration statement will be eligible for sale in the public market immediately after the effective
date of such registration statement (unless held by affiliates) subject to the lock-up agreements described below.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Lock-up Agreements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We, the selling stockholders and each of
our directors and executive officers and certain other persons have agreed, subject to certain exceptions, not to offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right
or warrant for the sale of, otherwise dispose of or transfer any shares of our common stock or any securities convertible into
or exchangeable or exercisable for common stock for a period of 180 days after the date of this prospectus, without the prior written
consent of Sandler O&rsquo;Neill &amp; Partners, L.P. See &ldquo;Underwriting.&rdquo; The underwriter does not have any present
intention or arrangement to release any shares of our common stock subject to lock-up agreements prior to the expiration of the
180-day lock-up period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_018"></A>CERTAIN MATERIAL U.S. FEDERAL INCOME
TAX CONSEQUENCES<BR>
FOR NON-U.S. HOLDERS OF COMMON STOCK</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following is a summary of certain material
United States federal income tax consequences relevant to non-U.S. holders, as defined below, of the purchase, ownership and disposition
of our common stock. The following summary is based on current provisions of the Internal Revenue Code of 1986, as amended, or
the Code, Treasury regulations and judicial and administrative authority, all of which are subject to change, possibly with retroactive
effect. This section dSoes not consider state, local, estate or foreign tax consequences, nor does it address tax consequences to
special classes of investors including, but not limited to, tax-exempt organizations, insurance companies, banks or other financial
institutions, partnerships or other entities classified as partnerships for United States federal income tax purposes, dealers
in securities, persons liable for the alternative minimum tax, traders in securities that elect to use a mark-to-market method
of accounting for their securities holdings, persons who have acquired our common stock as compensation or otherwise in connection
with the performance of services, or persons that will hold our common stock as a position in a hedging transaction, &ldquo;straddle,&rdquo;
&ldquo;conversion transaction&rdquo; or other risk reduction transaction. Tax consequences may vary depending upon the particular
status of an investor. The summary is limited to non-U.S. holders who will hold our common stock as &ldquo;capital assets&rdquo;
(generally, property held for investment). Investors should consult their tax advisors concerning the U.S. federal income tax consequences
in light of their own specific situation, as well as consequences arising under other federal tax laws (such as the federal estate,
gift or Medicare tax laws) and the laws of any other taxing jurisdiction.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As used herein, a &ldquo;U.S. holder&rdquo;
is:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">an individual citizen or resident of the United States;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">a corporation (or any other entity treated as a corporation) created
or organized in or under the laws of the United States, any state thereof or the District of Columbia;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">an estate the income of which is subject to U.S. federal income taxation
regardless of its source; or</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">a trust, if it (i)&nbsp;is subject to the primary supervision of a
court within the United States and one or more U.S. persons have the authority to control all substantial decisions of the trust,
or (ii)&nbsp;has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">A &ldquo;non-U.S. holder&rdquo; is an individual,
corporation, estate or trust that is not a U.S. holder. Special rules may apply to certain non-U.S. holders such as controlled
foreign corporations, passive foreign investment companies, expatriated entities subject to Section&nbsp;7874 of the Code, and,
in certain circumstances, individuals who are U.S. expatriates. Consequently, non-U.S. holders should consult their tax advisors
to determine the U.S. federal, state, local, non-U.S. and other tax consequences that may be relevant to them in light of their
particular circumstances.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If an entity or arrangement treated as a
partnership for United States federal income tax purposes holds our common stock, the tax treatment of a partner in the partnership
will generally depend upon the status of the partner and the activities of the partnership. If you are treated as a partner in
such an entity holding our common stock, you should consult your tax advisor as to the United States federal income tax consequences
applicable to you.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Distributions </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Distributions with respect to our common
stock will be treated as dividends when paid to the extent of our current or accumulated earnings and profits as determined for
United States federal income tax purposes. Except as described below, if you are a non-U.S. holder of our shares, dividends paid
to you are subject to withholding of United States federal income tax at a 30% rate or at a lower rate if you are eligible for
the benefits of an income tax treaty that provides for a lower rate. Even if you are eligible for a lower treaty rate, we and other
payors will generally be required to withhold at a 30% rate (rather than the lower treaty rate) on dividends paid to you, unless
you have furnished to us or another payor:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">A valid Internal Revenue Service Form W-8BEN or, in the case of a
foreign entity stockholder, an IRS Form W-8BEN-E (or an acceptable substitute form) upon which you certify, under penalties of
perjury, your status as a non-United States person and your entitlement to the lower treaty rate with respect to such payments,
or</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">In the case of payments made outside the United States to an offshore
account (generally, an account maintained by you at an office or branch of a bank or other financial institution at any location
outside the United States), a valid Internal Revenue Service Form W-8IMY or other documentary evidence establishing your entitlement
to the lower treaty rate in accordance with United States Treasury regulations.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If you are eligible for a reduced rate of
U.S. withholding tax under a tax treaty, you may obtain a refund of any amounts withheld in excess of that rate by timely filing
a refund claim with the Internal Revenue Service.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If dividends paid to you are &ldquo;effectively
connected&rdquo; with your conduct of a trade or business within the United States, or, if required by a tax treaty, the dividends
are attributable to a permanent establishment that you maintain in the United States, we and other payors generally are not required
to withhold tax from the dividends, provided that you have furnished to us or another payor a valid Internal Revenue Service Form
W-8ECI or an acceptable substitute form upon which you represent, under penalties of perjury, that:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">You are a non-United States person, and</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">The dividends are effectively connected with your conduct of a trade
or business within the United&nbsp;States and are includible in your gross income.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&ldquo;Effectively connected&rdquo; dividends
are taxed at rates applicable to United States citizens, resident aliens and domestic United States corporations. If you are a
corporate non-U.S. holder, &ldquo;effectively connected&rdquo; dividends that you receive may, under certain circumstances, be
subject to an additional &ldquo;branch profits tax&rdquo; at a 30% rate or at a lower rate if you are eligible for the benefits
of an income tax treaty that provides for a lower rate.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Sale or Redemption </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If you are a non-U.S. holder, you generally
will not be subject to United States federal income or withholding tax on gain realized on the sale, exchange or other disposition
of our common stock unless the gain is &ldquo;effectively connected&rdquo; with your conduct of a trade or business in the United
States or the gain is attributable to a permanent establishment that you maintain in the United States, if that is required by
an applicable income tax treaty as a condition to subjecting you to United States taxation on a net income basis. In certain circumstances,
redemption of our stock will be characterized as a dividend for United States income tax purposes and will be taxed under the rules
described in the preceding section.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Information Reporting and Backup Withholding
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Payment of dividends, and the tax withheld
on those payments, are subject to information reporting requirements. These information reporting requirements apply regardless
of whether withholding was reduced or eliminated by an applicable income tax treaty. Under the provisions of an applicable income
tax treaty or agreement, copies of the information returns reporting such dividends and withholding may also be made available
to the tax authorities in the country in which the non-U.S. holder resides. U.S. backup withholding will generally apply on payment
of dividends to non-U.S. holders unless such non-U.S. holders furnish to the payor a Form W-8BEN or, in the case of a foreign entity
stockholder, Form W-8BEN-E (or other applicable form), or otherwise establish an exemption and the payor does not have actual knowledge
or reason to know that the holder is a U.S. person, as defined under the Code, that is not an exempt recipient.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Payment of the proceeds of a sale of our
common stock within the United States or conducted through certain U.S.-related financial intermediaries is subject to information
reporting and, depending on the circumstances, backup withholding, unless the non-U.S. holder, or beneficial owner thereof, as
applicable, certifies that it is a non-U.S. holder</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">on Form W-8BEN or, in the case of a foreign entity stockholder, Form W-8BEN-E
(or other applicable form), or otherwise establishes an exemption and the payor does not have actual knowledge or reason to know
the holder is a U.S. person, as defined under the Code, that is not an exempt recipient.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Currently, the back-up withholding tax rate
is 28%. Any amount withheld under the backup withholding rules from a payment to a non-U.S. holder is allowable as a credit against
the non-U.S. holder&rsquo;s United States federal income tax, which may entitle the non-U.S. holder to a refund, provided that
the non-U.S. holder timely provides the required information to the Internal Revenue Service. Moreover, certain penalties may be
imposed by the Internal Revenue Service on a non-U.S. holder who is required to furnish information but does not do so in the proper
manner. Non-U.S. holders should consult with their tax advisors regarding the application of backup withholding in their particular
circumstances and the availability of and procedure for obtaining an exemption from backup withholding under current Treasury regulations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Recent Legislation Relating to Foreign Accounts </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Under Sections 1471 through 1474 of the
Code and the Treasury regulations and administrative guidance promulgated thereunder (collectively, FATCA), a 30% withholding tax
may be imposed on distributions of dividends and payments of gross proceeds from the sale or other disposition of our common stock
made to a &quot;foreign financial institution&quot; or a &quot;non-financial foreign entity&quot; (in each case, as defined in
the Code), regardless of whether such foreign institution or entity is a beneficial owner or an intermediary. To avoid such withholding,
in the case of a foreign financial institution, the foreign financial institution must undertake certain diligence and reporting
obligations and, in the case of a non-financial foreign entity, the non-financial foreign entity must either certify it does not
have any &quot;substantial United States owners&quot; (as defined in the Code) or furnish identifying information regarding each
substantial United States owner and satisfy certain other requirements, unless the foreign financial institution or non-financial
foreign entity otherwise qualifies for an exemption from these rules.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If the payee is a foreign financial institution
and is subject to the diligence and reporting requirements described above, it must enter into an agreement with the U.S. Department
of the Treasury requiring, among other things, that it undertake to identify accounts held by certain &quot;U.S. persons&quot;
or &quot;U.S.-owned foreign entities&quot; (in each case, as defined in the Code), annually report certain information about such
accounts and withhold 30% on certain payments to non-compliant foreign financial institutions and certain other account holders.
A foreign financial institution generally certifies compliance with these requirements on a valid Internal Revenue Service Form
W-8BEN-E. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States
governing FATCA may be subject to different rules.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If the payee is a non-financial foreign
entity, it generally provides the required certification on a valid Internal Revenue Service Form W-8BEN-E. Foreign entities located
in jurisdictions that have an intergovernmental agreement with the United States governing these withholding and reporting requirements
may be subject to different rules.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">These withholding taxes would be imposed
on dividends paid with respect to our common stock to foreign financial institutions or non-financial entities (including in their
capacity as agents or custodians for beneficial owners of our common stock) that fail to satisfy the above requirements. However,
under the applicable Treasury Regulations and IRS guidance, withholding under FATCA generally will not apply to payments of gross
proceeds from the sale or other disposition of our common stock before January 1, 2019. Under certain circumstances, a non-U.S.
holder might be eligible for refunds or credits of such taxes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Prospective non-U.S. holders should consult
with their tax advisors regarding the possible implications of FATCA on their investment in our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Non-U.S. Holders are encouraged to consult
with their tax advisors regarding the possible implications of the legislation on their investment in our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><A NAME="a_019"></A>UNDERWRITING</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We, the selling stockholders and the underwriter
named below will enter into an underwriting agreement with respect to the shares of common stock being offered hereby. Subject
to the terms and conditions contained in the underwriting agreement, the underwriter has agreed to purchase, and we and the selling
shareholders, collectively, have agreed to sell, the number of shares of our common stock set forth in the table below.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Name</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Number&nbsp;of&nbsp;Shares</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 82%; text-align: left; padding-bottom: 1pt; text-indent: -12pt; padding-left: 12pt">Sandler O&rsquo;Neill &amp; Partners, L.P.</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 15%; border-bottom: Black 1pt solid; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -12pt; padding-left: 0.5in">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The underwriter is committed to purchase
and pay for all such shares of common stock if any are purchased.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We have granted to the underwriter an option,
exercisable no later than 30 days after the date of this prospectus, to purchase up to [&#9679;]&nbsp;additional shares of common
stock at the public offering price less the underwriting discount set forth on the cover page of this prospectus. The underwriter
may exercise this option only to cover over-allotments, if any, made in connection with this offering. To the extent the option
is exercised and the conditions of the underwriting agreement are satisfied, we will be obligated to sell to the underwriter, and
the underwriter will be obligated to purchase, these additional shares of common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">The
underwriter proposes to offer the shares of common stock directly to the public at the offering price set forth on the cover page
of this prospectus and to certain securities dealers at the public offering price less a concession not in excess of $[</FONT><FONT STYLE="font-family: Symbol">&middot;</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif">]
per share. The underwriter may allow, and these dealers may re-allow, a concession not in excess of $[</FONT><FONT STYLE="font-family: Symbol">&middot;</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif">]
per share on sales to other dealers. After the public offering of the common stock, the underwriter may change the offering price
and other selling terms. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table shows the per share
and total underwriting discount that we will pay to the underwriter and the proceeds we will receive and the selling stockholders
will receive before expenses. These amounts are shown assuming both no exercise and full exercise of the underwriter&rsquo;s over-allotment
option to purchase additional shares.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Per&nbsp;Share</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Total<BR>
    Without<BR> Over-Allotment</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Total<BR>
    With<BR> Over-Allotment</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-indent: -12pt; padding-left: 12pt; width: 61%">Price to public</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="text-align: right; width: 10%">&nbsp;</TD><TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="text-align: right; width: 10%">&nbsp;</TD><TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="text-align: right; width: 10%">&nbsp;</TD><TD STYLE="text-align: left; width: 1%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 12pt">Underwriting discount</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 12pt">Proceeds to us, before expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -12pt; padding-left: 12pt">Proceeds to selling stockholders, before expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">We
estimate that the total expenses of the offering, excluding the underwriting discount, will be approximately $[</FONT><FONT STYLE="font-family: Symbol">&middot;</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif">]
million and are payable by us. We have agreed to reimburse the underwriter for their actual out-of-pocket expenses incurred in
connection with the offering, including, without limitation, legal fees and expenses, marketing, syndication and travel expenses.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The shares of common stock are being offered
by the underwriter, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of certain legal
matters by counsel for the underwriter and other conditions specified in the underwriting agreement. The underwriter reserves the
right to withdraw, cancel or modify this offer and to reject orders in whole or in part.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The underwriting agreement provides that
the obligations of the underwriter is conditional and may be terminated at its discretion based on its assessment of the state
of the financial markets. The obligations of the underwriter may also be terminated upon the occurrence of the events specified
in the underwriting agreement. The underwriting agreement provides that the underwriter is obligated to purchase all the shares
of common stock in this offering if any are purchased, other than those shares covered by the over-allotment option described above.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Lock-up Agreements</I></B><I>. </I>We,
each of our executive officers and directors, the selling stockholders and certain other persons, have agreed, subject to certain
exceptions for a period of 180&nbsp;days after the date of this prospectus, not to sell, offer, agree to sell, contract to sell,
hypothecate, pledge, grant any option to sell, make any short sale, or otherwise dispose of or hedge, directly or indirectly, any
shares of our common stock or securities convertible into, exchangeable or exercisable for any shares of our common stock or warrants
or other rights to purchase shares of our common stock or other similar securities without, in each case, the prior written consent
of Sandler O&rsquo;Neill &amp; Partners, L.P. These restrictions are expressly agreed to preclude us, and our executive officers
and directors and certain other persons, from engaging in any hedging or other transaction or arrangement that is designed to,
or which reasonably could be expected to, lead to or result in a sale, disposition or transfer, in whole or in part, of any of
the economic consequences of ownership of our common stock, whether such transaction would be settled by delivery of common stock
or other securities, in cash or otherwise.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Indemnity</I></B>. We have agreed
to indemnify the underwriter, and persons who control the underwriter, against certain liabilities, including liabilities under
the Securities Act, and to contribute to payments that the underwriter may be required to make in respect of these liabilities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Stabilization</I></B>. In connection
with this offering, the underwriter may engage in stabilizing transactions, over-allotment transactions, syndicate covering transactions
and penalty bids.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Stabilizing transactions permit bids to purchase shares of common
stock so long as the stabilizing bids do not exceed a specified maximum, and are engaged in for the purpose of preventing or retarding
a decline in the market price of the common stock while the offering is in progress.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Over-allotment transactions involve sales by the underwriter of shares
of common stock in excess of the number of shares the underwriter is obligated to purchase. This creates a syndicate short position
which may be either a covered short position or a naked short position. In a covered short position, the number of shares of common
stock over-allotted by the underwriter is not greater than the number of shares that they may purchase in the over-allotment option.
In a naked short position, the number of shares involved is greater than the number of shares in the over-allotment option. The
underwriter may close out any short position by exercising their over-allotment option and/or purchasing shares in the open market.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Syndicate covering transactions involve purchases of common stock
in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source
of shares to close out the short position, the underwriter will consider, among other things, the price of shares available for
purchase in the open market as compared with the price at which they may purchase shares through exercise of the over-allotment
option. If the underwriter sells more shares than could be covered by exercise of the over-allotment option and, therefore, have
a naked short position, the position can be closed out only by buying shares in the open market. A naked short position is more
likely to be created if the underwriter is concerned that after pricing there could be downward pressure on the price of the shares
in the open market that could adversely affect investors who purchase in the offering.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Penalty bids permit the representative to reclaim a selling concession
from a syndicate member when the common stock originally sold by that syndicate member is purchased in stabilizing or syndicate
covering transactions to cover syndicate short positions.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">These stabilizing transactions, syndicate
covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common stock or preventing
or retarding a decline in the market price of our common stock. As a result, the price of our common stock in the open market may
be higher than it would otherwise be in the absence of these transactions. Neither we nor the underwriter makes any representation
or prediction as to the effect that the transactions described above may have on the price of our common stock. These transactions
may be effected on the Nasdaq Capital Market, in the over-the-counter market or otherwise and, if commenced, may be discontinued
at any time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><A HREF="#TableOfContents">Table of Contents</A>&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>NASDAQ Capital Market Listing</I></B>.
We expect the shares to be approved for listing on the NASDAQ Capital Market, subject to notice of issuance, under the symbol &ldquo;ESQ.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Offering Price Determination</I></B>.
Before this offering, there has been no public market for our common stock. The initial public offering price will be determined
through negotiations between us, the selling stockholders and the underwriter. In addition to prevailing market conditions, the
factors to be considered in determining the initial public offering price are:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">the valuation multiples of publicly traded companies that the underwriter
believes to be comparable to us;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">our financial information;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">the history of, and the prospects for, our company and the industry
in which we compete;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">an assessment of our management, its past and present operations,
and the prospects for, and timing of, our future revenues;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">our book value; and</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">the above factors in relation to market values and various valuation
measures of other companies engaged in activities similar to ours.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">An active trading market for the shares
may not develop. It is also possible that after the offering the shares will not trade in the public market at or above the initial
public offering price.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">From time to time, the underwriter and its
affiliates have provided, and may continue to provide, investment banking services to us in the ordinary course of its businesses,
and may receive compensation for such services. The underwriter and its affiliates may also make investment recommendations and/or
publish or express independent research views in respect of those securities or instruments and may at any time hold, or recommend
to clients that they acquire, long and/or short positions in those securities and instruments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>Electronic Distribution</I></B>. A
prospectus in electronic format may be made available by e-mail or on the websites or through online services maintained by the
underwriter or its affiliates. In those cases, prospective investors may view offering terms online and may be allowed to place
orders online. The underwriter may agree with us to allocate a specific number of shares for sale to online brokerage account holders.
Any such allocation for online distributions will be made by the underwriter on the same basis as other allocations. Other than
the prospectus in electronic format, the information on the underwriter&rsquo;s website and any information contained on any other
website maintained by the underwriter is not part of this prospectus, has not been approved and/or endorsed by the underwriter
or us and should not be relied upon by investors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white"><B><I>Selling Restrictions</I></B>.
Other than in the United States, no action has been taken by us or the underwriter that would permit a public offering of the securities
offered by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus
may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in
connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances
that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this
prospectus comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution
of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered
by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><A HREF="#TableOfContents">Table of Contents</A>&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_020"></A>LEGAL MATTERS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The validity of the shares of common stock
being offered by this prospectus will be passed upon for us by Luse Gorman, PC, Washington, DC. Certain legal matters will be passed
upon for the underwriter by Manatt, Phelps &amp; Phillips LLP, San Francisco, California.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_021"></A>EXPERTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The consolidated financial statements of
Esquire Financial Holdings, Inc. and subsidiaries as of December 31, 2016 and 2015 and for each of the two years in the period
ended December 31, 2016, included in this prospectus, have been so included in reliance on the report of Crowe Horwath LLP, independent
registered public accounting firm, upon the authority of said firm as experts in accounting and auditing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_022"></A>WHERE YOU CAN FIND ADDITIONAL INFORMATION</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Esquire Financial Holdings, Inc. has filed
with the Securities and Exchange Commission a registration statement under the Securities Act of 1933 with respect to the shares
of common stock offered hereby. As permitted by the rules and regulations of the Securities and Exchange Commission, this prospectus
does not contain all the information set forth in the registration statement. Such information, including the appraisal report
which is an exhibit to the registration statement, can be examined without charge at the public reference facilities of the Securities
and Exchange Commission located at 100 F Street, N.E., Washington, D.C. 20549, and copies of such material can be obtained from
the Securities and Exchange Commission at prescribed rates. The Securities and Exchange Commission&rsquo;s telephone number is
1-800-SEC-0330. In addition, the Securities and Exchange Commission maintains a web site (http://www.sec.gov) that contains reports,
proxy and information statements and other information regarding registrants that file electronically with the Securities and Exchange
Commission, including Esquire Financial Holdings, Inc. The statements contained in this prospectus as to the contents of any contract
or other document filed as an exhibit to the registration statement are, of necessity, brief descriptions of the material terms
of, and should be read in conjunction with, such contract or document.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><A HREF="#TableOfContents">Table of Contents</A>&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="a_023"></A>INDEX TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="width: 90%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>Interim Condensed
    Consolidated Financial Statements</B></FONT></TD>
    <TD STYLE="width: 10%; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Condensed</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif">
    Consolidated Financial Statements</FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif"><A HREF="#c001">Condensed Consolidated Statements of Financial Condition</A></FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">F-2</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 9pt; text-align: left">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif"><A HREF="#c002">Condensed Consolidated Statements of Income</A></FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">F-3</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 9pt; text-align: left">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif"><A HREF="#c003">Condensed Consolidated Statements of Comprehensive Income</A></FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">F-4</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 9pt; text-align: left">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif"><A HREF="#c004">Condensed Consolidated Statements of Changes in Stockholders&rsquo; Equity</A></FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">F-5</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 9pt; text-align: left">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif"><A HREF="#c005">Condensed Consolidated Statements of Cash Flows</A></FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">F-6</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 9pt; text-align: left">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif"><A HREF="#c007">Notes to Interim Condensed Consolidated Financial Statements</A></FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">F-8</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif"><B>2016 and 2015 Consolidated Annual Financial Statements</B></FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif"><A HREF="#cc001">Independent Auditor&rsquo;s Report</A></FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">F-22</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Consolidated Financial Statements</FONT></TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif"><A HREF="#cc002">Consolidated Statements of Financial Condition</A></FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">F-23</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 9pt; text-align: left">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif"><A HREF="#cc003">Consolidated Statements of Income</A></FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">F-24</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 9pt; text-align: left">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif"><A HREF="#cc004">Consolidated Statements of Comprehensive Income</A></FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">F-25</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 9pt; text-align: left">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif"><A HREF="#cc005">Consolidated Statements of Changes in Stockholders&rsquo; Equity</A></FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">F-26</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 9pt; text-align: left">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif"><A HREF="#cc006">Consolidated Statements of Cash Flows</A></FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">F-27</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding-left: 9pt; text-align: left">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 9pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif"><A HREF="#cc007">Notes to Consolidated Financial Statements</A></FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">F-29</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;</P>

<P STYLE="margin: 0"></P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><A HREF="#TableOfContents">Table of Contents</A>&nbsp;</DIV>
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<P STYLE="margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_f3" TITLE="CCFC"></A><B><A NAME="c001"></A>ESQUIRE
FINANCIAL HOLDINGS, INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CONDENSED CONSOLIDATED STATEMENTS
OF FINANCIAL CONDITION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands, except per
share data)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">March 31,</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">December 31,</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2017</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Unaudited)</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">(Audited)</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">ASSETS</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 70%; text-align: left">Cash and due from banks</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">512</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">437</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Interest earning deposits</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">32,074</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">42,556</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Total cash and cash equivalents</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">32,586</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">42,993</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Securities available-for-sale, at fair value</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">103,652</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">92,645</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Securities, restricted, at cost</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,746</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,649</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Loans</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">290,556</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">278,578</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Less: allowance for loan losses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(3,523</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(3,413</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Loans, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">287,033</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">275,165</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Premises and equipment, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,737</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,767</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Accrued interest receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,635</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,541</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Deferred tax asset</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,582</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,108</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Other assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6,088</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,965</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt; padding-left: 9pt">Total assets</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">438,059</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">424,833</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">LIABILITIES AND StocKHOLDERS&rsquo; EQUITY</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Deposits:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Demand</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">133,473</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">124,990</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Savings, NOW and money market</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">227,212</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">221,843</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Time</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">22,687</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">23,955</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 27pt">Total deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">383,372</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">370,788</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Secured borrowings</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">284</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">371</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Accrued expenses and other liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,159</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,488</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-left: 9pt">Total Liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">384,815</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">372,647</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Commitments and Contingencies</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Stockholders&rsquo; equity:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Preferred Stock, par value $0.01; authorized 2,000,000
    shares; issued and outstanding (non-voting) 66,985 at March 31, 2017 and 66,985 December 31 2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Common stock, par value $0.01; authorized 15,000,000
    shares; issued and outstanding 5,003,030 shares at March 31, 2017, and 5,002,950 shares at December 31, 2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Additional paid-in capital</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">58,983</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">58,845</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Retained deficit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(5,011</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(5,826</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 16.2pt">Accumulated other comprehensive
    loss</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(779</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(884</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 34.2pt">Total stockholders&rsquo;
    equity</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">53,244</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">52,186</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 34.2pt">Total
    liabilities and stockholders&rsquo; equity</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">438,059</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">424,833</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>See accompanying condensed notes
to interim condensed consolidated financial statements.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><A HREF="#TableOfContents">Table of Contents</A>&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_f4" TITLE="CSI"></A><B><A NAME="c002"></A>ESQUIRE
FINANCIAL HOLDINGS, INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CONDENSED CONSOLIDATED STATEMENTS
OF INCOME</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands, except per
share data)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Unaudited)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">For the Three Months
    Ended</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">March 31,</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2017</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Interest income:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 70%; text-align: left">Loans</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">3,827</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">3,225</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Securities, available for sale</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">528</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">473</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Interest earning deposits and other</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">77</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">35</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Total interest income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,432</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,733</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Interest expense:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Savings, NOW and money market deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">109</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">90</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Time deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Borrowings</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Total interest expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">137</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">101</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Net interest income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,295</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,632</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Provision for loan losses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">150</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">145</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Net interest income after provision for loan losses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,145</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,487</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Non-interest income:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Customer related fees and service charges</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">366</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">228</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Merchant processing income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">838</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">753</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Net gains on sales of available-for-sale securities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Total non-interest income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,204</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">987</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Non-interest expense:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Employee compensation and benefits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,345</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,962</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Occupancy and equipment, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">387</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">282</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Professional and consulting services</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">389</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">413</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">FDIC assessment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">42</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Advertising and marketing</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">110</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">143</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Travel and business relations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">106</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">74</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">OCC assessments</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">29</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">26</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Data processing</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">370</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">339</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Other operating expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">246</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">131</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Total non-interest expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,024</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,420</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Net income before income taxes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,325</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,054</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Income tax expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">510</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">411</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net income</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">815</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">643</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: none; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Earnings per common share</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Basic</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.16</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.13</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Diluted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.16</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.13</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="text-underline-style: double">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>See accompanying condensed notes
to interim condensed consolidated financial statements.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="text-underline-style: double">&nbsp;</FONT></P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><A HREF="#TableOfContents">Table of Contents</A>&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="text-underline-style: double">&nbsp;&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_f5" TITLE="CSCI"></A><B><A NAME="c003"></A>ESQUIRE
FINANCIAL HOLDINGS, INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CONDENSED CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Unaudited)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="text-underline-style: double">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">For the Three Months
    Ended</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">March 31,</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2017</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 70%; text-align: left">Net income</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">815</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">643</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Other comprehensive income:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Unrealized holding gains arising during the period
    on securities available for sale</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">183</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,683</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Reclassification adjustment for net gains included
    in net income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(6</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 16.2pt">Tax effect</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(78</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(662</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 34.2pt">Total other comprehensive
    income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">105</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,027</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Total comprehensive income</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">920</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,670</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>See accompanying condensed notes
to interim condensed consolidated financial statements.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><A HREF="#TableOfContents">Table of Contents</A>&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_f6" TITLE="CSCSE"></A><B><A NAME="c004"></A>ESQUIRE
FINANCIAL HOLDINGS, INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CONDENSED CONSOLIDATED STATEMENTS
OF CHANGES IN STOCKHOLDERS&rsquo; EQUITY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Unaudited)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Accumulated</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Additional</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>other</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Preferred</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Common</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Preferred</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Common</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>paid in</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Retained</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>comprehensive</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>stockholders&rsquo;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>shares</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>shares</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>stock</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>stock</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>capital</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>deficit</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>income
    (loss)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>equity</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 20%; font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Balance at January
    1, 2016</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; text-align: right">157,985</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; text-align: right">4,911,870</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">2</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">49</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">58,456</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">(8,648</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">(434</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 7%; text-align: right">49,425</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Net income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">643</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">643</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Other comprehensive income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,027</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,027</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Stock options expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">75</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">75</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Balance
    at March 31, 2016</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">157,985</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4,911,870</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">49</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">58,531</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(8,005</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">593</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">51,170</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Balance at January 1, 2017</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">66,985</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,002,950</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">58,845</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(5,826</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(884</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">52,186</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Net income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">815</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">815</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Other comprehensive income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">105</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">105</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Issuance of common stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">80</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Stock options expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">137</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">137</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Balance
    at March 31, 2017</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">66,985</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5,003,030</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">50</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">58,983</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(5,011</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(779</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">53,244</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>See accompanying condensed notes
to interim condensed consolidated financial statements.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><A HREF="#TableOfContents">Table of Contents</A>&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_f7" TITLE="CSCF"></A><B><A NAME="c005"></A>ESQUIRE
FINANCIAL HOLDINGS, INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Unaudited)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">For the Three Months
    Ended</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">March 31,</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2017</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Cash flows from operating activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 70%; text-align: left">Net income</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">815</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">643</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.125in; padding-left: 0.125in">Adjustments to reconcile net income to net cash
    used in operating activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Provision for loan losses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">150</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">145</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.25in">Net security gains on available-for-sale securities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(6</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Depreciation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">102</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">42</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.25in">Stock options expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">137</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">75</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Net amortization:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.375in">Securities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">102</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">60</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.375in">Loans</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">179</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">145</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.25in">Changes in other assets and liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.375in">Accrued interest receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(94</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(140</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.375in">Deferred tax asset</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">448</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">411</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.375in">Other assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,123</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(647</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.375in">Accrued expenses and other liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(329</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">100</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Net cash provided by operating activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">387</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">828</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Cash flows from investing activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.125in; padding-left: 0.125in">Originations and purchases of loans, net of
    principal repayments</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(12,197</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(11,864</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Purchases of securities available for sale</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(15,379</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Proceeds of sales of securities available for sale</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,068</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Principal repayments on securities available for sale</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,453</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,606</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Purchases of securities, restricted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(97</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(57</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Purchases of premises and equipment</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(72</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(670</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.25in">Net cash used in investing activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(23,292</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(5,917</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Cash flows from financing activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Net Increase (decrease) in deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,584</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,993</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Decrease in secured borrowings</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(87</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Proceeds from issuance of common stock</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.25in">Net cash provided by (used in) financing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">12,498</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,996</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Net decrease in cash and cash equivalents</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(10,407</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(8,085</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Cash and cash equivalents at beginning of the period</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">42,993</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">33,154</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Cash and cash equivalents at end of the period</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">32,586</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">25,069</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>(Continued)</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><A HREF="#TableOfContents">Table of Contents</A>&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_f8" TITLE="CSCF2"></A><B><A NAME="c006"></A>ESQUIRE
FINANCIAL HOLDINGS, INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Unaudited)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">For the Three Months
    Ended</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">March 31,</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2017</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD NOWRAP STYLE="font-weight: bold; text-align: left">Supplemental disclosures of cash flow information:</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD NOWRAP STYLE="text-align: left">Cash paid during the period for:</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 70%; text-align: left; padding-left: 9pt">Interest</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">136</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">101</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Income taxes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">29</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>See accompanying condensed notes
to interim condensed consolidated financial statements.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_f9" TITLE="CN"></A><B><A NAME="c007"></A>ESQUIRE
FINANCIAL HOLDINGS, INC</B>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands, except per
share data)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Unaudited)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE&nbsp;1&nbsp;&mdash;&nbsp;Basis
of Presentation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The interim
condensed consolidated financial statements include the accounts of Esquire Financial Holdings, Inc. and its wholly owned
subsidiary, Esquire Bank, N.A. These entities are collectively referred to as &ldquo;the Company.&rdquo; All significant
intercompany accounts and transactions have been eliminated in consolidation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The accompanying
unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting
principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial information. In the opinion of management, the interim statements
reflect all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows of the
Company on a consolidated basis and all such adjustments are recurring in nature. These financial statements and the accompanying
notes should be read in conjunction with the Company&rsquo;s audited financial statements for the years ended December 31, 2016
and 2015. Operating results for the three months ended March 31, 2017 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2017 or any other period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Subsequent Events</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The Bank has evaluated
subsequent events for recognition and disclosure through the date of issuance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Secured Borrowing</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The Company had
a secured borrowing of $284 and $371 as of March 31, 2017 and December 31, 2016, respectively, relating to certain loan participations
sold by the Company that did not qualify for sales treatment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Preferred Stock </I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The Series B 0.00%
Non-Voting preferred stock does not have a maturity date and is not convertible by the holder, but is convertible on a one for
one basis into shares of common stock by us under certain circumstances. In addition, the preferred stock does not have a liquidation
preference. Preferred shares have equal rights to receive dividends when dividends are declared on common stock, and thus are
considered participating securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Loss Contingencies</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Loss contingencies,
including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood
of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there are now such
matters that will have a material effect on the consolidated financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>New Accounting Pronouncements</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Accounting Standards
Update (ASU) 2014-09, &ldquo;Revenue from Contracts with Customers (Topic 606)&rdquo; implements a common revenue standard that
clarifies the principles for recognizing revenue. The core principle of ASU 2014-09 is that an entity should recognize revenue
to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following
steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine
the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue
when (or as) the entity satisfies a performance obligation. In August 2016, the (Financial Accounting Standards Board FASB) deferred
the effective date of the ASU by one year which means ASU 2014-09 will be effective for the Company on January 1, 2018. The Company
is currently evaluating the potential impact of ASU 2014-09 on its consolidated financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">On January 5,
2016, the FASB issued ASU 2016-01, &ldquo;Financial Instruments&ndash;Overall: Recognition and Measurement of Financial Assets
and Financial Liabilities&rdquo; (the ASU).&nbsp;Under this ASU, the current GAAP model is changed in the areas of accounting
for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for
financial instruments. In addition, the FASB clarified guidance related to the valuation allowance assessment when recognizing
deferred tax assets resulting from unrealized losses on available-for-sale debt securities.&nbsp;The ASU will be effective for
public business entities in beginning after December 15, 2017, including interim periods within those fiscal years. Adoption of
this standard is not expected to have a material effect on the Company&rsquo;s operating results or financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>(Continued)</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ESQUIRE FINANCIAL HOLDINGS, INC</B>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands, except per
share data)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Unaudited)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE&nbsp;1&nbsp;&mdash;&nbsp;Basis
of Presentation (Continued)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">On February 25,
2016, the FASB completed its Leases project by issuing ASU No. 2017-02, &ldquo;Leases (Topic 842).&rdquo; The new guidance affects
any organization that enters into a lease, or sublease, with some specified exemptions. Under the new guidance, a lessee will
be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP,
the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend
on its classification as a finance or operating lease. However, unlike current GAAP, which requires only capital leases to be
recognized on the balance sheet, the new ASU will require both types of leases to be recognized on the balance sheet.&nbsp;The
ASU will also require expanded disclosures and will take effect for fiscal years beginning after December 15, 2018, and for interim
periods within fiscal years. The Company is currently evaluating the impact of the ASU on its financial condition and results
of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">In March 2016,
the FASB issued ASU 2016-09, Compensation&mdash;Stock Compensation (Topic 718): &ldquo;Improvements to Employee Share-Based Payment
Accounting.&rdquo; This update includes multiple provisions intended to simplify various aspects of the accounting for share-based
payments. For public companies, the amendments in this update are effective for annual periods beginning after December 15, 2016,
and interim periods within those annual periods. Adoption of this standard in the first quarter of 2017 did not have a material
effect on the Company&rsquo;s operating results or financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">On June 16, 2016,
the FASB issued Accounting Standards Update No. 2016-13, &ldquo;Financial Instruments &ndash; Credit Losses (Topic 326): Measurement
of Credit Losses on Financial Instruments&rdquo; (the ASU).&nbsp;This ASU replaces the incurred loss model with an expected loss
model,&nbsp;referred to as &ldquo;current expected credit loss&rdquo; (CECL) model. It will significantly change estimates for
credit losses related to financial assets measured at amortized cost, including loans receivable, held-to-maturity (HTM) debt
securities and certain other contracts. This ASU will be effective for the Company in fiscal years beginning after December 15,
2019, including interim periods within those fiscal years. The Company is currently in the process of evaluating the impact of
this ASU on its financial position, results of operations and cash flows.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE</B>&nbsp;<B>2&nbsp;&mdash;&nbsp;Securities</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Available-for-Sale Securities</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The amortized
cost, gross unrealized gains and losses and estimated fair value of securities available for sale were as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Gross</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Gross</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Amortized</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Unrealized</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Unrealized</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Fair</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Cost</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Gains</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Losses</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Value</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: left; text-indent: -0.1in; padding-left: 0.1in">March 31, 2017</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 48%; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Mortgage-backed securities - agency</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">15,842</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">14</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(439</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">15,417</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Collateralized mortgage obligations
    (CMO&rsquo;s) &ndash; agency</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">89,076</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">40</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(881</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">88,235</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Total available-for-sale</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">104,918</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">54</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(1,320</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">103,652</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: left; text-indent: -0.1in; padding-left: 0.1in">December 31, 2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Mortgage-backed securities - agency</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">16,417</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">12</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(417</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">16,012</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Collateralized mortgage obligations
    (CMO&rsquo;s) &ndash; agency</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">77,677</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">56</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,100</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">76,633</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Total available-for-sale</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">94,094</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">68</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(1,517</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">92,645</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>(Continued)</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>



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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><A HREF="#TableOfContents">Table of Contents</A>&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ESQUIRE FINANCIAL HOLDINGS, INC</B>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands, except per
share data)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Unaudited)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE</B>&nbsp;<B>2&nbsp;&mdash;&nbsp;Securities
</B>(Continued)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The amortized
cost and fair value of debt securities are shown by contractual maturity. Expected maturities may differ from contractual maturities
if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at
a single maturity date are shown separately. We have no securities due at a single maturity.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>March
    31, 2017</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Amortized</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Fair</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Cost</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Value</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 64%; text-align: left">Mortgage-backed securities - agency</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">15,842</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">15,417</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">CMO&rsquo;s &ndash; agency</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">89,076</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">88,235</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 9pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">104,918</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">103,652</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Mortgage-backed
securities include residential pass-through certificates guaranteed by FHLMC, FNMA, or GNMA and the CMO&rsquo;s are backed by
government agency pass-through certificates. The 2017 and 2016 pass-through certificates are fixed rate instruments. CMO&rsquo;s,
by virtue of the underlying residential collateral or structure, are fixed rate current pay sequentials or planned amortization
classes (PAC&rsquo;s).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">When purchasing
investment securities, the Company&rsquo;s overall interest-rate risk profile is considered as well as the adequacy of expected
returns relative to risks assumed, including prepayments. In continuously managing the investment securities portfolio, management
occasionally sells investment securities in response to, or in anticipation of, changes in interest rates and spreads, actual
or anticipated prepayments, liquidity needs and credit risk associated with a particular security.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 22.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 22.5pt">The proceeds from
sales and calls of securities and the associated gains and losses are listed below for the three months ended March 31,:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4.2in; text-align: left">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 75%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2017</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 64%; text-align: left">Proceeds</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">4,068</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Gross gains</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Gross losses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The tax provision
related to the realized gain was $2, for the three months ended 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">At March 31, 2017,
securities having a fair value of $88,235 were pledged to the Federal Home Loan Bank of New York (FHLB) for borrowing capacity
totaling $78,796. At December 31, 2016, securities having a fair value of approximately $76,633 were pledged to the FHLB for borrowing
capacity totaling $72,837. At March 31, 2017 and December31, 2016, the Company had no outstanding FHLB advances.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">At March 31, 2017,
securities having a fair value of $15,417 were pledged to the Federal Reserve Bank of New&nbsp;York (FRB) for borrowing capacity
totaling $15,126. At December 31, 2016, securities having a fair value of approximately $16,012 were pledged to the FRB for borrowing
capacity totaling $15,580. At March 31, 2017 and December 31, 2016, the Company had no outstanding FRB borrowings.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">At March 31, 2017
and December 31, 2016, the Company, also had lines of credits of $3,500 and $4,000 with Atlantic Community Bankers' Bank and Zions
Bank, respectively. No amounts were drawn, nor were there securities pledged against these lines at March 31, 2017 and December
31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>(Continued)</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>



<!-- Field: Page; Sequence: 137; Value: 1 -->
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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><A HREF="#TableOfContents">Table of Contents</A>&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ESQUIRE FINANCIAL HOLDINGS, INC</B>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands, except per
share data)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Unaudited)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE</B>&nbsp;<B>2&nbsp;&mdash;&nbsp;Securities
</B>(Continued)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The following
table provides the gross unrealized losses and fair value, aggregated by investment category and length of time the individual
securities have been in a continuous unrealized loss position as of:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Less
    Than 12 Months</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>12 Months
    or Longer</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Gross</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Gross</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Gross</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Fair</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Unrealized</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Fair</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Unrealized</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Fair</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Unrealized</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Value</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Losses</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Value</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Losses</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Value</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Losses</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: left; text-indent: -0.1in; padding-left: 0.1in">March 31, 2017</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 34%; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Mortgage-backed securities &ndash; agency</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">13,447</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">(439</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">13,447</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">(439</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">CMO&rsquo;s - Agency</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">60,572</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(657</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,646</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(224</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">66,218</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(881</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Total temporarily impaired
    securities</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">74,019</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(1,096</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5,646</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(224</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">79,665</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(1,320</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-decoration: underline; text-align: left; text-indent: -0.1in; padding-left: 0.1in">December 31, 2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Mortgage-backed securities &ndash; agency</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">13,936</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(417</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">13,936</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(417</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">CMO&rsquo;s - agency</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">50,269</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(859</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,973</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(241</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">56,242</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,100</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Total temporarily impaired
    securities</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">64,205</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(1,276</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5,973</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(241</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">70,178</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(1,517</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Management reviews
the investment portfolio on a quarterly basis to determine the cause, magnitude and duration of declines in the fair value of
each security. In estimating other-than-temporary impairment (OTTI), management considers many factors including: (1)&nbsp;the
length of time and extent that fair value has been less than cost, (2)&nbsp;the financial condition and near term prospects of
the issuer, (3)&nbsp;whether the market decline was affected by macroeconomic conditions, and (4)&nbsp;whether the Company has
the intent to sell the security or more likely than not will be required to sell the security before its anticipated recovery.
If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair
value is recognized as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount
of impairment is split into two components as follows: (1)&nbsp;OTTI related to credit loss, which must be recognized in the income
statement and (2)&nbsp;OTTI related to other factors, which is recognized in other comprehensive income. The credit loss is defined
as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. The assessment
of whether any other than temporary decline exists may involve a high degree of subjectivity and judgment and is based on the
information available to management at a point in time. Management evaluates securities for OTTI at least on a quarterly basis,
and more frequently when economic or market conditions warrant such an evaluation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">At March 31, 2017,
securities in unrealized loss positions were issuances from government sponsored entities. Due to the decline in fair value attributable
to changes in interest rates, not credit quality and because the Company does not have the intent to sell the securities and it
is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider
the securities to be other-than-temporarily impaired at March 31, 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">No impairment
charges were recorded for the three months ended March 31, 2017 and 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>(Continued)</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>



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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><A HREF="#TableOfContents">Table of Contents</A>&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ESQUIRE FINANCIAL HOLDINGS, INC</B>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands, except per
share data)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Unaudited)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE&nbsp;3&nbsp;&mdash;&nbsp;Loans</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The composition
of loans by class is summarized as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>% of</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>% of</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>March
    31, 2017</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>December
    31, 2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 48%; text-align: left">1-4 family residential</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">47,556</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">16</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">49,597</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">18</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Commercial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">112,818</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">39</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">106,064</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Multifamily</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">92,755</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">32</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">83,410</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Commercial real estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21,277</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22,198</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,054</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,610</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Consumer</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">11,037</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10,571</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total loans</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">289,497</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">277,450</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Deferred costs and unearned premiums, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,059</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,128</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Allowance for loan losses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(3,523</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(3,413</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 9pt">Net loans</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">287,033</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">275,165</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><FONT STYLE="text-underline-style: double">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The following
tables present the activity in the allowance for loan losses by class for the three months ending March 31, 2017 and 2016:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>1-4 Family</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Commercial</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Residential</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Commercial</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Multifamily</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Real
    Estate</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Construction</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Consumer</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: left; text-indent: -0.1in; padding-left: 0.1in">March 31, 2017</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Allowance for loan losses:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 23%; text-align: left; text-indent: -0.1in; padding-left: 0.35in">Beginning balance</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">360</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">1,934</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">621</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">238</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">141</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">119</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">3,413</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Provision (credit) for loan losses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(10</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">105</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">48</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(11</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(39</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">57</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">150</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Recoveries</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.35in">Loans charged-off</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(40</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(40</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.35in">Total ending allowance balance</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">350</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,039</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">669</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">227</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">102</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">136</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,523</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: none; text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-decoration: underline; text-align: left; text-indent: -0.1in; padding-left: 0.1in">March 31, 2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Allowance for loan losses:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Beginning balance</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">213</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1,536</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">533</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">230</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">134</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">153</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">2,799</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Provision for loan losses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">61</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">48</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">145</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Recoveries</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.35in">Loans charged-off</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.35in">Total ending allowance balance</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">221</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,622</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">554</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">231</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">140</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">201</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,969</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>(Continued)</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>



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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><A HREF="#TableOfContents">Table of Contents</A>&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ESQUIRE FINANCIAL HOLDINGS, INC</B>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands, except per
share data)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Unaudited)<FONT STYLE="text-underline-style: double">&nbsp;</FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE&nbsp;3&nbsp;&mdash;&nbsp;Loans
</B>(Continued)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The following
tables present the balance in the allowance for loan losses and the recorded investment in loans by class and based on impairment
method as of March 31, 2017 and December 31, 2016:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>1-4 Family</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Commercial</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Residential</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Commercial</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Multifamily</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Real
    Estate</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Construction</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Consumer</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: left; text-indent: -0.1in; padding-left: 0.1in">March 31, 2017</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Allowance for loan losses:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Ending allowance balance attributable to loans:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.6in">Individually evaluated for impairment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 23%; text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.6in">Collectively evaluated
    for impairment</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; border-bottom: Black 1pt solid; text-align: right">350</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; border-bottom: Black 1pt solid; text-align: right">2,039</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; border-bottom: Black 1pt solid; text-align: right">669</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; border-bottom: Black 1pt solid; text-align: right">227</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; border-bottom: Black 1pt solid; text-align: right">102</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; border-bottom: Black 1pt solid; text-align: right">136</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; border-bottom: Black 1pt solid; text-align: right">3,523</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.35in">Total ending allowance balance</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">350</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,039</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">669</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">227</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">102</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">136</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,523</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Loans:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Loans individually evaluated for impairment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.35in">Loans collectively evaluated
    for impairment</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">47,556</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">112,818</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">92,755</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">21,277</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,054</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">11,037</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">289,497</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.35in">Total ending loans balance</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">47,556</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">112,818</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">92,755</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">21,277</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4,054</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">11,037</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">289,497</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.25in">Recorded investment
is not adjusted for accrued interest and deferred costs due to immateriality.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>(Continued)</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>



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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><A HREF="#TableOfContents">Table of Contents</A>&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ESQUIRE FINANCIAL HOLDINGS, INC</B>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands, except per
share data)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Unaudited)&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE 3 &mdash; Loans </B>(Continued<B>)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>1-4 Family</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Commercial</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Residential</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Commercial</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Multifamily</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Real
    Estate</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Construction</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Consumer</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: left; text-indent: -0.1in; padding-left: 0.1in">December 31, 2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Allowance for loan losses:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Ending allowance balance attributable to loans:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.6in">Individually evaluated for impairment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 23%; text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.6in">Collectively evaluated
    for impairment</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; border-bottom: Black 1pt solid; text-align: right">360</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; border-bottom: Black 1pt solid; text-align: right">1,934</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; border-bottom: Black 1pt solid; text-align: right">621</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; border-bottom: Black 1pt solid; text-align: right">238</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; border-bottom: Black 1pt solid; text-align: right">141</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; border-bottom: Black 1pt solid; text-align: right">119</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; border-bottom: Black 1pt solid; text-align: right">3,413</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.35in">Total ending allowance balance</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">360</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,934</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">621</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">238</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">141</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">119</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,413</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Loans:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Loans individually evaluated for impairment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.35in">Loans collectively evaluated
    for impairment</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">49,597</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">106,064</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">83,410</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">22,198</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,610</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10,571</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">277,450</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.35in">Total ending loans balance</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">49,597</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">106,064</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">83,410</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">22,198</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5,610</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">10,571</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">277,450</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Non-Performing Loans</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Non-performing
loans include loans 90 days past due and still accruing and non-accrual loans. At March 31, 2017 and December 31, 2016, none of
the Company&rsquo;s loans met these conditions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The following
tables present the aging of the recorded investment in past due loans by class of loans as of March 31, 2017 and December 31,
2016:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>30 - 59</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>60 - 89</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Greater than</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Days</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Days</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>90 Days</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Loans Not</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Past
    Due</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Past
    Due</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Past
    Due</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Past
    Due</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Past
    Due</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: left">March 31, 2017</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 34%; text-align: left">1-4 family residential</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">47,556</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">47,556</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Commercial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">284</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">284</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">112,534</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">112,818</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Multifamily</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">92,755</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">92,755</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Commercial real estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21,277</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21,277</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,054</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,054</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Consumer</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">11,037</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">11,037</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">284</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">284</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">289,213</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">289,497</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>(Continued)</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>



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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><A HREF="#TableOfContents">Table of Contents</A>&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ESQUIRE FINANCIAL HOLDINGS, INC</B>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands, except per
share data)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Unaudited)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE&nbsp;3&nbsp;&mdash;&nbsp;Loans
</B>(Continued)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>30 - 59</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>60 - 89</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Greater than</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Days</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Days</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>90 Days</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Loans Not</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Past
    Due</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Past
    Due</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Past
    Due</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Past
    Due</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Past
    Due</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: left">December 31, 2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 34%; text-align: left">1-4 family residential</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">203</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">203</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">49,394</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">49,597</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Commercial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">106,064</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">106,064</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Multifamily</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">83,410</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">83,410</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Commercial real estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22,198</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22,198</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,610</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,610</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Consumer</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10,571</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10,571</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">203</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">203</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">277,247</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">277,450</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Credit Quality Indicators</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The Company categorizes
loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current
financial information, historical payment experience, credit documentation, public information, and current economic trends, among
other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed
whenever a credit is extended, renewed or modified, or when an observable event occurs indicating a potential decline in credit
quality, and no less than annually for large balance loans.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The Company uses
the following definitions for risk ratings:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><U>Special
Mention</U> - Loans classified as special mention have a potential weakness that deserves management's close attention. If left
uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's
credit position at some future date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><U>Substandard
</U>- Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or
of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation
of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies
are not corrected.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><U>Doubtful
</U>- Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">the added characteristic
that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values,
highly questionable and improbable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Loans not meeting
the criteria above that are analyzed individually as part of the above described process are considered</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">to be pass rated loans.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Based on the most
recent analysis performed, the risk category of loans by class of loans is as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Special</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Pass</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Mention</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Substandard</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Doubtful</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: justify">March 31, 2017</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 48%; text-align: justify">1-4 family residential</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">47,556</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Commercial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">111,889</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">929</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Multifamily</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">92,755</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Commercial real estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21,277</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,054</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Consumer</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">11,037</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">288,568</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">929</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>(Continued)</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><A HREF="#TableOfContents">Table of Contents</A>&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ESQUIRE FINANCIAL HOLDINGS, INC</B>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands, except per
share data)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Unaudited)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE&nbsp;3&nbsp;&mdash;&nbsp;Loans
</B>(Continued)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Special</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Pass</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Mention</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Substandard</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Doubtful</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: justify">December 31, 2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 48%; text-align: justify">1-4 family residential</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">49,597</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Commercial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">105,777</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">287</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Multifamily</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">83,410</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Commercial real estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22,198</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,610</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Consumer</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10,571</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">277,163</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">287</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The Company considers
the performance of the loan portfolio and its impact on the allowance for loan losses. For residential and consumer loan classes,
the Company evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The Company has
no loans identified as troubled debt restructurings at March 31, 2017 and December 31, 2016. Furthermore, there were no loan modifications
during the three months ended March 31, 2017 and 2016 that were troubled debt restructurings. In order to determine whether a
borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment
default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company&rsquo;s
internal underwriting policy.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE&nbsp;4&nbsp;&mdash;&nbsp;Share-Based
Payment Plans </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Stock Option Plan</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The Company issues
incentive and non-statutory stock options (&ldquo;options&rdquo;) to certain employees and directors pursuant to the 2007 Stock
Option Plan (&ldquo;the Plan&rdquo;), which has been approved by the stockholders. Options to purchase common stock are granted
by the Compensation Committee of the Board of Directors. The Plan allows for a maximum of 270,000&nbsp;shares of common stock
to be issued. As of March 31, 2017, 262,500 shares have been issued.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">On May 26, 2011,
the stockholders of the Company approved the Company&rsquo;s 2011 Stock Compensation Plan (the &ldquo;Stock Plan&rdquo;). The
Plan allows for a maximum of 404,607&nbsp;shares of common stock to be issued. On August 26, 2015, the stockholders of the Company
approved an amendment to the Company&rsquo;s 2011 Stock Compensation Plan to authorize an additional 350,000 shares for issuance
under the plan. The Company has issued 750,545 shares under the 2011 Stock Compensation Plan as of March 31, 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Under the Stock
Option Plans, options are granted with an exercise price equal to the fair value of the Company&rsquo;s stock at the date of the
grant. Options granted vest on five annual installments (20% per annum) and have ten year contractual terms. All options provide
for accelerated vesting upon a change in control (as defined in the Plan). Stock options exercised result in the issuance of new
shares.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The fair value
of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model that uses the
assumptions noted in the table below. Expected volatilities are based on peer volatility. The Company uses peer data to estimate
option exercise and post-vesting termination behavior. The expected term of options granted is based on peer data and represents
the period of time that options granted are expected to be outstanding, which</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">takes into account that the options
are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve
in effect at the time of the grant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">There were no
stock options granted during the three months ended March 31, 2017 and March 31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>(Continued)</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>



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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><A HREF="#TableOfContents">Table of Contents</A>&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ESQUIRE FINANCIAL HOLDINGS, INC</B>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands, except per
share data)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Unaudited)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE&nbsp;4&nbsp;&mdash;&nbsp;Share-Based
Payment Plans </B>(Continued)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The following
table presents a summary of the activity related to options as of March 31, 2017:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Weighted</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Weighted</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Average</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Average</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Remaining</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Exercise</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Contractual</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Options</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Price</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Life
    (Years)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: left">March 31, 2017</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 61%; text-align: left">Outstanding at beginning of year</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">1,024,045</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">12.13</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Granted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Exercised</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Forfeited</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">11,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">11.36</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Outstanding at period end</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,013,045</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">12.14</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">7.11</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Vested or expected to vest</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,013,045</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">12.14</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">7.11</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Exercisable at period end</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">333,315</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">11.39</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3.52</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The Company recognized
compensation expense related to options of $137 and $75 for the three months ended March 31, 2017 and 2016, respectively. At March
31, 2017, unrecognized compensation cost related to non-vested options was approximately $2,000 and is expected to be recognized
over a weighted average period of 3.83 years. The intrinsic value for outstanding, vested or expected to vest, and exercisable
options at March 31, 2017, was approximately $370 for all three categories.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE&nbsp;5&nbsp;&mdash;&nbsp;Earnings
per Share</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The two-class
method is used in the calculation of basic and diluted earnings per share. Under the two-class method, earnings available to common
shareholders for the period are allocated between common shareholders and participating securities according to participation
rights in undistributed earnings. Our preferred shares are considered participating securities. The factors used in the earnings
per share computation follow:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2017</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: left">Basic</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-align: left">Net income available to common shareholders</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">815</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">643</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Less: Earnings allocated to participating securities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">11</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">20</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Net income allocated to common shareholders</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">804</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">623</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Weighted average common shares outstanding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,002,978</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,911,870</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Basic earnings per common share</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.16</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.13</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-decoration: underline; text-align: left">Diluted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Net income allocated to common shareholders for basic earnings per share</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">804</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">623</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Weighted average shares outstanding for basic earnings per common share</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,002,978</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,911,870</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Add: Dilutive effects of assumed exercises of stock options</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">29,550</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">30,550</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Average shares and dilutive potential common shares</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5,032,528</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4,942,420</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Diluted earnings per common share</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.16</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.13</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Stock options
totaling 864,295 and 537,795 shares of common stock were not considered in computing diluted earnings per common share for 2017
and 2016 because they were anti-dilutive.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>(Continued)</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>



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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><A HREF="#TableOfContents">Table of Contents</A>&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ESQUIRE FINANCIAL HOLDINGS, INC</B>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands, except per
share data)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Unaudited)</B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE&nbsp;6&nbsp;&mdash;&nbsp;Fair
Value Measurements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><U>Level
1</U> &ndash; Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability
to access as of the measurement date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><U>Level
2</U> &ndash; 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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><U>Level
3</U> &ndash; Significant unobservable inputs that reflect a company&rsquo;s own assumptions about the assumptions that market
participants would use in pricing an asset or liability.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">For available-for-sale
securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level
2).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Assets and liabilities
measured at fair value on a recurring basis are summarized below:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="10" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Fair
    Value Measurements Using</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Quoted Prices</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Significant</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>In Active</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Other</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Significant</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Markets For</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Observable</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Unobservable</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Identical Assets</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Inputs</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Inputs</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Level
    1)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Level
    2)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Level
    3)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: left">March 31, 2017</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Available-for-sale securities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 55%; text-align: left; padding-left: 0.25in">Mortgage-backed securities - agency</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">15,417</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.25in">CMO&rsquo;s - agency</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">88,235</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 27pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">103,652</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: left">December 31, 2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Available-for-sale securities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Mortgage-backed securities - agency</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">16,012</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.25in">CMO&rsquo;s - Agency</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">76,633</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 27pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">92,645</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 9pt; text-align: justify; text-indent: 0.25in">There
were no transfers between Level 1 and Level 2 during the year. There were no assets measured on a non-recurring basis as of March
31, 2017 and December 31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 9pt; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 9pt; text-align: justify"><I>Estimated Fair Value of
Financial Instruments</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 9pt; text-align: justify; text-indent: 0.25in">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</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>(Continued)</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>



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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ESQUIRE FINANCIAL HOLDINGS, INC</B>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands, except per
share data)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Unaudited)</B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 9pt; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><B>NOTE&nbsp;6&nbsp;&mdash;&nbsp;Fair
Value Measurements </B>(Continued)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 9pt; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0pt; text-align: justify; text-indent: 0in">of anticipated
future business, premiums or discounts that could result from offering for sale at one time the Company&rsquo;s entire holdings
of a particular financial instrument, or the tax consequences of realizing gains or losses on the sale of financial instruments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 9pt; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 9pt; text-align: justify; text-indent: 0.25in">The Company
used the following method and assumptions in estimating the fair value of its financial instruments:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 9pt; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><U>Cash
and Due from Banks and Interest Earning Deposits</U>: Carrying amounts approximate fair value, since these instruments are either
payable on demand or have short-term maturities. Cash on hand and non-interest due from bank accounts are Level 1 and interest
bearing deposits are Level 2.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><U>Securities
Available-for-Sale</U>: The fair values for securities available for sale are determined by quoted market prices, 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&rsquo; relationship to other benchmark quoted securities (Level 2 inputs).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><U>Securities,
Restricted</U>: It is not practical to determine the fair value of FHLB and FRB stock due to restrictions placed on its transferability.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><U>Loans</U>:
The estimated fair values of real estate mortgage loans and other loans receivable are based on discounted cash flow calculations
that use available market benchmarks when establishing discount factors for the types of loans resulting in a Level 3 classification.
Exceptions may be made for adjustable rate loans (with resets of one year or less), which would be discounted
straight to their rate index plus or minus an appropriate spread. The method utilized to determine fair value does not represent
exit price.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><U>Accrued
Interest Receivable and Payable</U>: For these short-term instruments, the carrying amount is a reasonable estimate of the fair
value resulting in a Level 2 or 3 classification.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><U>Deposits</U>:
The estimated fair value of certificates of deposits are based on discounted cash flow calculations that use a replacement cost
of funds approach to establishing discount rates for certificates of deposits maturities resulting in a Level 2 classification.
Stated value is fair value for all other deposits resulting in a Level 1 classification.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><U>Secured
Borrowings</U>: Borrowings represent secured borrowings and carrying value is a reasonable estimate of fair value resulting in
a Level 2 classification.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><U>Off-Balance-Sheet
Liabilities</U>: The fair value of off-balance-sheet commitments to extend credit is estimated using fees currently charged to
enter into similar agreements. The fair value is immaterial as of March 31, 2017 and 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>(Continued)</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>



<!-- Field: Page; Sequence: 146; Value: 1 -->
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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><A HREF="#TableOfContents">Table of Contents</A>&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ESQUIRE FINANCIAL HOLDINGS, INC</B>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands, except per
share data)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Unaudited)</B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><B>NOTE&nbsp;6&nbsp;&mdash;&nbsp;Fair
Value Measurements </B>(Continued)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following tables
presents the carrying amounts and fair values of the Company&rsquo;s financial instruments:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="10" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Fair Value Measurement at</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>Carrying</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="10" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>March
    31, 2017, Using:</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Value</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Level
    1)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Level
    2)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Level
    3)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Financial Assets:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 35%; text-align: left">Cash and due from banks</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">512</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">512</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">512</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Interest earning deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">32,074</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">32,074</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">32,074</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Securities available for sale</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">103,652</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">103,652</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">103,652</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Securities, restricted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,746</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">N/A</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">N/A</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">N/A</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">N/A</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Loans, net of allowance</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">287,033</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">288,358</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">288,358</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Accrued interest receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,635</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">229</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,406</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,635</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Financial Liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Certificates of deposit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22,687</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22,743</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22,743</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Demand and other deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">360,685</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">360,685</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">360,685</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Secured borrowings</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">284</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">284</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">284</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Accrued interest payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="10" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Fair Value Measurement at</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>Carrying</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="10" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>December
    31, 2016, Using:</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Value</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Level
    1)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Level
    2)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Level
    3)</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Financial Assets:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 35%; text-align: left">Cash and due from banks</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">437</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">437</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">437</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Interest earning deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">42,556</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">42,556</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">42,556</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Securities available for sale</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">92,645</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">92,645</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">92,645</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Securities, restricted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,649</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">N/A</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">N/A</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">N/A</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">N/A</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Loans, net of allowance</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">275,165</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">277,620</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">277,620</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Accrued interest receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,541</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">201</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,340</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,541</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Financial Liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Certificates of deposit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23,955</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23,930</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23,930</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Demand and other deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">346,833</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">346,833</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">346,833</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Secured borrowings</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">371</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">371</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">371</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Accrued interest payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>(Continued)</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>



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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><A HREF="#TableOfContents">Table of Contents</A>&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ESQUIRE FINANCIAL HOLDINGS, INC</B>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands, except per
share data)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Unaudited)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE&nbsp;7&nbsp;&mdash;&nbsp;Accumulated
Other Comprehensive (Loss) Income </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4.5pt; text-align: justify; text-indent: 0.25in">The
following is changes in accumulated other comprehensive (loss) income by component, net of tax for the three months ending March
31, 2017 and 2016:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4.5pt; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2017</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Unrealized Losses on</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Unrealized Losses on</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Three months ended
    March 31,</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Available
    for Sale Securities</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Available
    for Sale Securities</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 54%; text-align: left">Beginning balance</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 20%; text-align: right">(884</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 20%; text-align: right">(434</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Other comprehensive income before reclassifications</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">105</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,023</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Amounts reclassified from accumulated
    other comprehensive income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Net current period other comprehensive
    income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">105</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,027</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Ending balance</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(779</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">593</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4.5pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The following
represents the reclassifications out of accumulated other comprehensive loss for the three months ended March 31, 2017, and 2016:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Three months ended</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>March 31,</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Affected Line in the</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2017</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Consolidated Statement
    of Income</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 40%; text-align: justify">Realized gain on securities sales</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">6</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 33%; text-align: left">Net gains on securities available-for-sale</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Income tax expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">Income tax expense</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt">Total reclassifications, net of tax</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: center; padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><IMG SRC="t1700906_s1logo.jpg" ALT=""></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD NOWRAP STYLE="width: 70%; text-align: right; font-size: 10pt"></TD>
    <TD STYLE="color: #002B61; font: 10pt Times New Roman, Times, Serif; margin: 0 0 8pt; text-align: left; text-indent: 0in; width: 30%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Crowe
    Horwath LLP</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD NOWRAP STYLE="text-align: right; font-size: 10pt"></TD>
    <TD NOWRAP STYLE="color: #002B61; font: 10pt Times New Roman, Times, Serif; margin: 0 0 8pt; text-align: left; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Independent
    Member Crowe Horwath International</FONT></TD></TR>
</TABLE>




<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0.15pt 0 0; text-align: center; text-indent: 0in"><A NAME="cc001"></A><A NAME="f2"></A>REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0in">Audit Committee and Stockholders</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Esquire Financial Holdings, Inc.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Jericho, New York</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We have audited the accompanying consolidated
statements of financial condition of Esquire Financial Holdings, Inc. as of December 31, 2016 and 2015, and the related consolidated
statements of income, comprehensive income, changes in stockholders' equity, and cash flows for the years then ended. These consolidated
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We conducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting
in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our audit included consideration
of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting
in accordance with the standards of the Public Company Accounting Oversight Board (United States). Accordingly, we express no
such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for
our opinion.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In our opinion, the consolidated financial
statements referred to above present fairly, in all material respects, the financial position of Esquire Financial Holdings, Inc.
as of December 31, 2016 and 2015, and the results of its operations and its cash flows for the years then ended in conformity
with U.S. generally accepted accounting principles.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 50%; font-size: 10pt">&nbsp;<IMG SRC="t1700906_s1sig.jpg" ALT=""></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Crowe Horwath LLP</FONT></TD></TR>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0in">Livingston, New Jersey</P>

<P STYLE="margin: 0">February 24, 2017</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><A HREF="#TableOfContents">Table of Contents</A>&nbsp;</DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="cc002"></A><A NAME="a_002"></A>ESQUIRE FINANCIAL HOLDINGS, INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="f3"></A><B>CONSOLIDATED STATEMENTS OF FINANCIAL
CONDITION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands, except per share
data)</B></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt"><B>At December 31,</B></FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2015</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">ASSETS</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Cash and due from banks</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">437</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">450</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Interest earning deposits</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">42,556</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">32,704</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Total cash and cash equivalents</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">42,993</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">33,154</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Securities available-for-sale, at fair value</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">92,645</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">84,239</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Securities, restricted, at cost</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,649</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,430</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Loans</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">278,578</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">224,519</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Less: allowance for loan losses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(3,413</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,799</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">loans, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">275,165</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">221,720</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Premises and equipment, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,767</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">329</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Accrued interest receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,541</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,418</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Deferred tax asset</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,108</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,347</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Other assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,965</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6,013</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt; padding-left: 9pt">Total assets</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">424,833</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">352,650</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">LIABILITIES AND StocKHOLDERS&rsquo; EQUITY</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Deposits:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Demand</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">124,990</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">97,291</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Savings, NOW and money market</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">221,843</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">194,496</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Time</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">23,955</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9,900</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 27pt">Total deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">370,788</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">301,687</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Secured borrowings</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">371</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">381</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Accrued expenses and other liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,488</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,157</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-left: 9pt">Total liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">372,647</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">303,225</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><B>Commitments and contingencies</B> (Note 11)</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">-</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Stockholders&rsquo; equity:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.25in">Preferred stock, par value $0.01; authorized &nbsp;&nbsp;2,000,000 shares (non-voting); issued and outstanding &nbsp;&nbsp;66,985 shares at December 31, 2016 and &nbsp;&nbsp;157,985 shares at December 31, 2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.25in">Common stock, par value $0.01; authorized &nbsp;&nbsp;15,000,000 shares; issued and outstanding &nbsp;&nbsp;5,002,950 shares at December 31, 2016, and &nbsp;&nbsp;4,911,870 shares at December 31, 2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">49</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.25in">Additional paid-in capital</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">58,845</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">58,456</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.25in">Retained deficit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(5,826</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(8,648</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.25in">Accumulated other comprehensive loss</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(884</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(434</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt; padding-left: 0.375in">Total stockholders&rsquo; equity</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">52,186</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">49,425</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt; padding-left: 0.375in">Total liabilities and stockholders&rsquo; equity</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">424,833</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">352,650</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><I>See accompanying
notes to consolidated financial statements.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><B>&nbsp;</B></P>


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B><A NAME="cc003"></A><A NAME="a_003"></A>ESQUIRE FINANCIAL HOLDINGS, INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="f4"></A>CONSOLIDATED STATEMENTS OF INCOME</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands, except per share
data)</B></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B></B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>For
    the Years Ended <BR> December 31,</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2015</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Interest income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-align: justify">Loans</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">14,071</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">10,594</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Securities, available-for-sale</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,875</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,713</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Interest earning deposits and other</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">222</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">144</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; padding-left: 0.25in">Total interest income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,168</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,451</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: justify">Interest expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Savings, NOW and money market deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">414</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">353</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Time deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">72</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">78</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Borrowings</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">25</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">26</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; padding-bottom: 1pt; padding-left: 0.25in">Total interest expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">511</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">457</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Net interest income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,657</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,994</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Provision for loan losses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">595</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">930</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Net interest income after provision for loan losses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,062</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,064</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: justify">Non-interest income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Customer related fees and service charges</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,180</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">741</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Merchant processing income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,939</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,202</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Net gains on securities available-for-sale</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; padding-left: 0.25in">Total non-interest income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,125</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,943</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: justify">Non-interest expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Employee compensation and benefits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,244</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,251</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Occupancy and equipment, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,604</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,412</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Professional and consulting services</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,642</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,699</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Data processing</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,369</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,187</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Advertising and marketing</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">430</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">334</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Travel and business relations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">324</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">301</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">OCC assessments</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">112</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">105</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">FDIC assessments</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">99</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">245</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Other operating expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">775</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">637</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; padding-bottom: 1pt; padding-left: 0.25in">Total non-interest expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">14,599</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">12,171</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Net income before income taxes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,588</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,836</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Income tax expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,766</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">664</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: justify; padding-bottom: 2.5pt">Net income</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,822</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,172</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Earnings per common share <B>(See Note 10)</B></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; padding-left: 0.125in">Basic</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.56</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.25</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-left: 0.125in">Diluted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.55</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.25</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><I>See accompanying
notes to consolidated financial statements.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B><A NAME="cc004"></A><A NAME="a_004"></A>ESQUIRE FINANCIAL HOLDINGS, INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><A NAME="f5"></A><B>CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B>(Dollars in thousands)</B></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B></B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-size: 8pt; font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-size: 8pt; font-weight: bold; text-align: center; padding-bottom: 1pt">For the Years Ended <BR> December 31,</TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-size: 8pt; font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2016</TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2015</TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-size: 8pt; font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-size: 8pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-size: 8pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-size: 8pt; font-weight: bold">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-size: 8pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Net income</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">2,822</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">1,172</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Other comprehensive loss:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Unrealized losses arising during the period on securities available-for-sale</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(738</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(304</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Reclassification adjustment for net gains &nbsp;&nbsp;included in net income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Tax effect</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">282</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">120</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.25in">Total other comprehensive loss</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(450</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(184</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Total comprehensive income</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,372</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">988</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><I>See accompanying
notes to consolidated financial statements.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="cc005"></A><A NAME="a_005"></A>ESQUIRE FINANCIAL HOLDINGS, INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="f6"></A>CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS&rsquo; EQUITY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands)</B></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Preferred <BR> shares</B></FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Common <BR> shares</B></FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Preferred <BR> stock</B></FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Common <BR> stock</B></FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Additional <BR> paid in <BR> capital</B></FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Retained <BR> deficit</B></FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Accumulated <BR> other <BR> comprehensive
    <BR>
    loss</B></FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Total <BR> stockholders&rsquo; <BR> equity</B></FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in; width: 20%"><FONT STYLE="font-size: 8pt">Balance
    at January 1, 2015</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">157,985</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">4,088,410</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">2</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">41</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">48,569</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">(9,820</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">(250</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="width: 7%; text-align: right"><FONT STYLE="font-size: 8pt">38,542</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Net income</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1,172</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1,172</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Other comprehensive loss</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(184</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(184</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Issuance of common stock
    net of offering costs</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">823,460</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">8</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">9,749</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">9,757</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Stock
    options expense</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">138</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">138</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Balance
    at December 31, 2015</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">157,985</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">4,911,870</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">49</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">58,456</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(8,648</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(434</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">49,425</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Net income</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2,822</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2,822</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Other comprehensive loss</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(450</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(450</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Exchange of preferred
    stock for common stock</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(91,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">91,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(1</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Issuance of common stock</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">80</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Stock
    options expense</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">388</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">388</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Balance
    at December 31, 2016</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">66,985</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">5,002,950</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">1</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">50</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">58,845</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">(5,826</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">(884</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">52,186</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><I>See accompanying
notes to consolidated financial statements.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="cc006"></A><A NAME="a_006"></A>ESQUIRE FINANCIAL HOLDINGS, INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="f7"></A>CONSOLIDATED STATEMENTS OF CASH FLOWS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands)</B></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">For
    the Years Ended <BR> December 31,</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2015</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Cash flows from operating activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Net income</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">2,822</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">1,172</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; text-indent: -0.1in; padding-left: 0.1in">Adjustments to reconcile net income to net cash used in operating activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Provision for loan losses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">595</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">930</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Net gains on securities available-for-sale</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(6</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Depreciation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">166</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">237</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Stock options expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">388</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">138</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Net amortization:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.25in">Securities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">344</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">256</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Loans</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">421</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">395</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Changes in other assets and liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Accrued interest receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(123</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(321</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.25in">Deferred tax asset</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,521</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">546</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in">Other assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(202</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,123</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.25in">Accrued expenses and other liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">172</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">292</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Write-offs related to offices closed</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">221</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">47</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Net cash provided by operating activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,319</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,569</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Cash flows from investing activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Originations and purchases of loans, net of principal repayments</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(54,461</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(52,533</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Purchases of securities available-for-sale</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(30,235</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(24,664</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Settlement of sales of securities available-for-sale</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,719</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Proceeds of sales of securities available-for-sale</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,068</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Principal repayments on securities available-for-sale</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,691</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,790</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Purchase of securities, restricted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(453</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,202</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Redemption of securities, restricted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">234</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Other assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,250</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Purchases of premises and equipment</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,666</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(85</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Net cash used in investing activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(65,572</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(60,966</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Cash flows from financing activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Net increase in deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">69,101</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,913</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Decrease in secured borrowings</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(10</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(10</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Proceeds from the issuance of common stock</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9,757</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Net cash provided by financing activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">69,092</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,660</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Net increase (decrease) in cash and cash equivalents</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,839</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(38,737</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Cash and cash equivalents at beginning of the period</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">33,154</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">71,891</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Cash and cash equivalents at end of the period</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">42,993</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">33,154</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ESQUIRE FINANCIAL HOLDINGS, INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CONSOLIDATED STATEMENTS OF CASH FLOWS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands)</B></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">For the Years Ended</FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">December 31,</FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2016</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">2015</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Supplemental disclosures of cash flow information:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Cash paid during the period for:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%; text-align: left; padding-left: 0.125in">Interest</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">508</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">458</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.125in">Taxes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">234</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">95</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Noncash disclosures:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.125in">Exchange of preferred stock for common stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><I>See accompanying
notes to consolidated financial statements.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="cc007"></A><A NAME="a_007"></A>ESQUIRE FINANCIAL HOLDINGS, INC</B>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="f8"></A>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>December&nbsp;31, 2016 and 2015</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands, except per share
data)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE&nbsp;1&nbsp;&mdash;&nbsp;Business
and Summary of Significant Accounting Policies</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Business</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Esquire Financial
Holdings, Inc. (the &ldquo;Company&rdquo;) is a registered bank holding company and the parent company of Esquire Bank, National
Association (the &ldquo;Bank&rdquo;). In August of 2015, the Company and the Bank were converted from a savings and loan holding
company and savings bank to a bank holding company and national bank, respectively, and the Company, formerly a Delaware corporation,
was reincorporated through a merger to a Maryland corporation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The Bank is an independent,
full-service national bank that serves the banking needs of law professionals, professional service firms, small to mid-sized businesses
and individuals. The Bank was established in 2006 and began operations in October 2006. The Bank&rsquo;s headquarters is located
in Jericho, New York. The Bank also operates a branch in Garden City, New York and an administrative office in Palm Beach Gardens,
Florida.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">As a full-service
bank, the Bank offers checking, savings, money market and time deposits; a wide range of commercial and consumer loans, as well
as customary banking services. Through electronic delivery channels, the Bank provides bill payment services, wire transfers, ACH
origination, account transfers and real time deposit relationship updates. These innovative services are complimented with a full
range of traditional banking products and services. While the Bank is a full-service institution available to all potential customers,
the focus is marketing to law firms and other professional service firms, small to mid-sized businesses and individuals in the
local community surrounding the branch office and New York boroughs in order to grow the deposit base. Additionally, due, in part,
to the substantial ties that many of the board members and organizers have to the legal community, the Bank concentrates most of
its marketing efforts on the legal community in these areas and nationally.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The Bank entered into
the merchant service business as an acquiring bank in which credit and debit card transactions are settled on behalf of merchants.
The revenue earned on behalf of merchants, net of expenses, is paid to the independent sales organizations (ISO&rsquo;s). The Bank&rsquo;s
revenue from this transaction is shown as merchant processing income on the statements of income. Revenue is recognized when earned.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The consolidated financial
statements include Esquire Financial Holdings, Inc. and its wholly owned subsidiary, Esquire Bank, N.A. and are referred to as
&ldquo;the Company.&rdquo; Intercompany transactions and balances are eliminated in consolidation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Basis of Presentation and Use of Estimates</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The accounting and
financial reporting policies are in conformity with U.S. generally accepted accounting principles (GAAP). The preparation of financial
statements requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities,
the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income
and expenses during the reporting period. Such estimates are subject to change in the future as additional information becomes
available or previously existing circumstances are modified. Actual results could differ from those estimates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Statement of Cash Flows</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">For purposes of the
accompanying statements of cash flows, cash and cash equivalents are defined as the amounts included in the consolidated statements
of financial condition under the captions &ldquo;Cash and Due from Banks&rdquo; and &ldquo;Interest Earning Deposits&rdquo;, with
contractual maturities of less than 90&nbsp;days. Net cash flows are reported for customer loan and deposit transactions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Securities</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">All securities are
classified as available-for-sale and carried at fair value. Unrealized gains and losses on these securities are reported, net of
applicable taxes, as a separate component of accumulated other comprehensive income (loss), a component of stockholders&rsquo;
equity.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Interest income on
securities, including amortization of premiums and accretion of discounts, is recognized using the level yield method without anticipating
prepayments (except for mortgage-backed securities where prepayments are</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ESQUIRE FINANCIAL HOLDINGS, INC</B>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>December&nbsp;31, 2016 and 2015</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands, except per share
data)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE&nbsp;1&nbsp;&mdash;&nbsp;Business
and Summary of Significant Accounting Policies (</B>Continued)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">anticipated) over the lives of the individual
securities. Realized gains and losses on sales of securities are computed using the specific identification method.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Loans</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Loans that management
has the intent and ability to hold for the foreseeable future until maturity or payoff are stated at the principal amount outstanding,
net of deferred loan fees and costs for originated loans and net of unamortized premiums or discounts for purchased loans. Interest
income is recognized using the level yield method. Net deferred loan fees, origination costs, unamortized premiums or discounts
are recognized in interest income over the loan term as a yield adjustment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Non-Accrual</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Interest income on mortgage and commercial
loans is discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection.
Consumer loans are typically charged off no later than 120 days past due. Past due status is based on the contractual terms of
the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest
is considered doubtful. Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous
loans that are collectively evaluated for impairment and individually classified impaired loans. A loan is moved to non-accrual
status in accordance with the Company&rsquo;s policy, typically after 90 days of non-payment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in; color: #0070C0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">All interest accrued
but not received for loans placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted
for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when
all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Provision and Allowance for Loan Losses</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The allowance for
loan losses is a valuation allowance for probable incurred credit losses. The allowance for loan losses is increased by provisions
for loan losses charged to income. Losses are charged to the allowance when all or a portion of a loan is deemed to be uncollectible.
Subsequent recoveries of loans previously charged off are credited to the allowance for loan losses when realized. Management estimates
the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific
borrower situations and estimated collateral values, economic conditions and other factors. Allocations of the allowance may be
made for specific loans, but the entire allowance is available for any loan that, in Management&rsquo;s judgment, should be charged
off.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The allowance consists
of specific and general components. The specific component relates to loans that are individually classified as impaired when,
based on current information and events, it is probable that the Company will be unable to collect all amounts due according to
the contractual terms of the loan agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Factors considered
by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal
and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified
as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into
consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for
the delay, the borrower&rsquo;s prior payment record, and the amount of the shortfall in relation to the principal and interest
owed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">All loans, except
for consumer loans are individually evaluated for impairment. If a loan is impaired, a portion of the allowance is allocated as
a specific allowance. The measurement of an impaired loan is based on (i)&nbsp;the present value of expected future cash flows
discounted at the loan&rsquo;s effective interest rate, (ii)&nbsp;the loan&rsquo;s observable market price or (iii)&nbsp;the fair
value of the collateral if the loan is collateral dependent.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Loans for which the
terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered
troubled debt restructurings and classified as impaired.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ESQUIRE FINANCIAL HOLDINGS, INC</B>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>December&nbsp;31, 2016 and 2015</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands, except per share
data)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE&nbsp;1&nbsp;&mdash;&nbsp;Business
and Summary of Significant Accounting Policies </B>(Continued)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Troubled debt restructurings are separately
identified for impairment disclosures and are measured at the present value of estimated future cash flows using the loan&rsquo;s
effective rate at inception. If a troubled debt restructuring is considered to be a collateral dependent loan, the loan is reported,
net, at the fair value of the collateral. For troubled debt restructurings that subsequently default, the Company determines the
amount of reserve in accordance with the accounting policy for the allowance for loan losses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The general component
is based on historical loss experience adjusted for current factors. The historical loss experience is determined by portfolio
segment and is based on the actual loss history experienced by the Company. This actual loss experience is supplemented with other
economic factors based on the risks present for each portfolio segment. These economic factors include consideration of the following:
levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume
and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures,
and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends
and conditions; industry conditions; and effects of changes in credit concentrations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Management has
identified the following loan segments: Commercial Real Estate, Multifamily, Construction, Commercial, 1-4 Family Residential
and Consumer. The risks associated with a concentration in real estate loans include potential losses from fluctuating values
of land and improved properties. Commercial Real Estate and Multifamily loans are expected to be repaid from the cash flow of
the underlying property so the collective amount of rents must be sufficient to cover all operating expenses, property
management and maintenance, taxes and debt service. Increases in vacancy rates, interest rates or other changes in general
economic conditions can all have an impact on the borrower and their ability to repay the loan. Construction loans are
considered riskier than commercial financing on improved and established commercial real estate. The risk of potential loss
increases if the original cost estimates or time to complete are significantly off. The remainder of the loan portfolio is
comprised of commercial and consumer loans. The primary risks associated with the commercial loans is the cash flow of the
business, the experience and quality of the borrowers&rsquo; management, the business climate, and the impact of economic
factors. The primary risks associated with 1-4 Family Residential and Consumer loans relate to the borrower, such as the risk
of a borrower&rsquo;s unemployment as a result of deteriorating economic conditions or the amount and nature of a
borrower&rsquo;s other existing indebtedness, and the value of the collateral securing the loan if the Bank must take
possession of the collateral<I>.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Premises and Equipment</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Premises and equipment,
including leasehold improvements, are stated at cost, net of accumulated depreciation and amortization. Equipment, which includes
furniture and fixtures, are depreciated over the assets&rsquo; estimated useful lives using the straight-line method (three to
ten&nbsp;years). Amortization of leasehold improvements is recognized on a straight-line basis over the lesser of the expected
lease term or the estimated useful life of the asset. Costs incurred to improve or extend the life of existing assets are capitalized.
Repairs and maintenance are charged to expense.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Federal Home Loan Bank (FHLB) Stock</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The Bank is a member
of the FHLB system. Members are required to own a certain amount of stock based on the level of mortgage related assets, borrowings
and other factors. FHLB stock is carried at cost, classified as a restricted security and periodically evaluated for impairment
based on the ultimate recovery of par value. Dividends are reported as interest income.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Federal Reserve Bank (FRB) Stock</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The Bank is a member
of its regional FRB. FRB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment
based on ultimate recovery of par value. Dividends are reported as interest income.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Loan Commitments and Related Financial
Instruments</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Financial instruments
include off balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, are issued to
meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral
or ability to repay. Such financial instruments are recorded when they are funded.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ESQUIRE FINANCIAL HOLDINGS, INC</B>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>December&nbsp;31, 2016 and 2015</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands, except per share
data)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE&nbsp;1&nbsp;&mdash;&nbsp;Business
and Summary of Significant Accounting Policies </B>(Continued)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Transfers of Financial Assets</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Transfers of financial
assets are accounted for as sales, when control over the assets has been relinquished. Control over transferred assets is deemed
to be surrendered when the assets have been isolated from the Company, the transferee obtains the right (free of conditions that
constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the Company does not maintain
effective control over the transferred assets through an agreement to repurchase them before their maturity.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Income Taxes</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Income taxes are provided
for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable
to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized
in income in the period the change occurs. Deferred tax assets are reduced, through a valuation allowance, if necessary, by the
amount of such benefits that are not expected to be realized based on current available evidence.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">A tax position is
recognized as a benefit only if it is &ldquo;more likely than not&rdquo; that the tax position would be sustained in a tax examination,
with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than
50% likely of being realized on examination. For tax positions not meeting the &ldquo;more likely than not&rdquo; test, no tax
benefit is recorded. The Company recognizes interest and/or penalties related to income tax matters in income tax expense.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Earnings per Common Share</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Basic earnings per
common share is net earnings allocated to common stock divided by the weighted average number of common shares outstanding during
the period. All outstanding preferred shares are considered participating securities for computation of basic earnings per common
share. Diluted earnings per common share include the dilutive effect of additional potential common shares issuable under stock
options.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Share-Based Payment</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Share based payment
guidance requires the Company to recognize the grant-date fair value of stock options and other equity-based compensation issued
to employees and non-employees in the statements of income. A Black-Scholes model is utilized to estimate the fair value of stock
options. Compensation cost for stock options are recognized as non-interest expense in the statement of income on a straight-line
basis over the vesting period of each stock option grant. Compensation cost for stock options includes the impact of an estimated
forfeiture rate. At December&nbsp;31, 2016, no stock options had vesting conditions linked to the performance of the Company or
market conditions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Dividend Restriction</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Banking regulations
require maintaining certain capital levels and may limit the dividends paid by the bank to the holding company or by the holding
company to shareholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Segment Reporting</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The Company&rsquo;s
operations are exclusively in the financial services industry and include the provision of traditional banking services. Management
evaluates the performance of the Company based on only one business segment, that of community banking. In the opinion of management,
the Company does not have any other reportable segments as defined by Accounting Standards Codification (ASC) Topic 280, &ldquo;Disclosure
about Segments of an Enterprise and Related Information&rdquo;.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Restrictions on Cash</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Cash on hand or on
deposit with the FRB was required to meet regulatory reserve and clearing requirements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ESQUIRE FINANCIAL HOLDINGS, INC</B>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>December&nbsp;31, 2016 and 2015</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands, except per share
data)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE&nbsp;1&nbsp;&mdash;&nbsp;Business
and Summary of Significant Accounting Policies </B>(Continued)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Reclassifications</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Some items in the
prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on prior
year net income or stockholders&rsquo; equity.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Comprehensive Income</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Comprehensive income
(loss) consists of net income and other comprehensive (loss) income. Other comprehensive (loss) income includes unrealized gains
and losses on securities available-for-sale which are also recognized as separate components of equity.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Fair Value of Financial Instruments</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Fair values of financial
instruments are estimated using relevant market information and other assumptions, as more fully disclosed in a separate note.
Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments,
and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions
could significantly affect the estimates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Loss Contingencies</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Loss contingencies,
including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood
of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there now are such
matters that will have a material effect on the consolidated financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>New Accounting Pronouncements</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Accounting Standards
Update (ASU) 2014-09, &ldquo;Revenue from Contracts with Customers (Topic 606)&rdquo; implements a common revenue standard that
clarifies the principles for recognizing revenue. The core principle of ASU 2014-09 is that an entity should recognize revenue
to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following
steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine
the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue
when (or as) the entity satisfies a performance obligation. In July 2015, the (Financial Accounting Standards Board FASB) deferred
the effective date of the ASU by one year which means ASU 2014-09 will be effective for the Company on January 1, 2018. The Company
is currently evaluating the potential impact of ASU 2014-09 on its consolidated financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">On January 5, 2016,
the FASB issued ASU 2016-01, &ldquo;Financial Instruments&ndash;Overall: Recognition and Measurement of Financial Assets and Financial
Liabilities&rdquo; (the ASU).&nbsp;Under this ASU, the current GAAP model is changed in the areas of accounting for equity investments,
financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments.
In addition, the FASB clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting
from unrealized losses on available-for-sale debt securities.&nbsp;The ASU will be effective for public business entities in fiscal
years beginning after December 15, 2017, including interim periods within those fiscal years. Adoption of this standard is not
expected to have a material effect on the Company&rsquo;s operating results or financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">On February 25, 2016,
the FASB completed its Leases project by issuing ASU No. 2016-02, &ldquo;Leases (Topic 842).&rdquo; The new guidance affects any
organization that enters into a lease, or sublease, with some specified exemptions.&nbsp;Under the new guidance, a lessee will
be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP,
the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend
on its classification as a finance or operating lease. However, unlike current GAAP, which requires only capital leases to be recognized
on the balance sheet, the new ASU will require both types of leases to be recognized on the balance sheet.&nbsp;The ASU will also
require expanded disclosures.&nbsp;The ASU on leases will take effect for fiscal years beginning after December 15, 2018, and for
interim periods within those fiscal years. The Company is currently evaluating the impact of the ASU on its financial condition
and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ESQUIRE FINANCIAL HOLDINGS, INC</B>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>December&nbsp;31, 2016 and 2015</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands, except per share
data)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE&nbsp;1&nbsp;&mdash;&nbsp;Business
and Summary of Significant Accounting Policies </B>(Continued)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">In March 2016, the
FASB issued ASU 2016-09, Compensation&mdash;Stock Compensation (Topic 718): &ldquo;Improvements to Employee Share-Based Payment
Accounting.&rdquo; This update includes multiple provisions intended to simplify various aspects of the accounting for share-based
payments. For public companies, the amendments in this update are effective for annual periods beginning after December 15, 2016,
and interim periods within those annual periods. Early adoption is permitted for any organization in any interim or annual period.
Adoption of this standard is not expected to have a material effect on the Company&rsquo;s operating results or financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">On June 16, 2016,
the FASB issued Accounting Standards Update No. 2016-13, &ldquo;Financial Instruments &ndash; Credit Losses (Topic 326): Measurement
of Credit Losses on Financial Instruments&rdquo; (the ASU).&nbsp;This ASU replaces the incurred loss model with an expected loss
model,&nbsp;referred to as &ldquo;current expected credit loss&rdquo; (CECL) model.&nbsp;It will significantly change estimates
for credit losses related to financial assets measured at amortized cost, including loans receivable, held-to-maturity (HTM) debt
securities and certain other contracts. This ASU will be effective for the Company in fiscal years beginning after December 15,
2019, including interim periods within those fiscal years.&nbsp;The Company is currently in the process of evaluating the impact
of this ASU on its financial position, results of operations and cash flows.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><I>Subsequent Events</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The Bank has evaluated
subsequent events for recognition and disclosure through the date of issuance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE</B>&nbsp;<B>2&nbsp;&mdash;&nbsp;Securities</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Available-for-Sale Securities</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The amortized cost,
gross unrealized gains and losses and estimated fair value of securities available-for-sale were as follows at December&nbsp;31:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 96%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Gross</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Gross</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Amortized</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Unrealized</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Unrealized</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">Fair</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Cost</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Gains</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Losses</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Value</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: left; text-indent: -0.1in; padding-left: 0.1in">2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 48%; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Mortgage-backed securities - agency</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">16,417</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">12</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(417</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">16,012</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Collateralized mortgage obligations (CMO&rsquo;s) &ndash; agency</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">77,677</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">56</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,100</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">76,633</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Total available-for-sale</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">94,094</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">68</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(1,517</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">92,645</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: left; text-indent: -0.1in; padding-left: 0.1in">2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Government agency debentures</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">4,064</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(63</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">4,001</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Mortgage-backed securities - agency</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17,445</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">27</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(325</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17,147</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Collateralized mortgage obligations (CMO&rsquo;s) &ndash; agency</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">63,447</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">116</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(472</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">63,091</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Total available-for-sale</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">84,956</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">143</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(860</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">84,239</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The amortized cost
and fair value of debt securities are shown by contractual maturity. Expected maturities may differ from contractual maturities
if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a
single maturity date are shown separately.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ESQUIRE FINANCIAL HOLDINGS, INC</B>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>December&nbsp;31, 2016 and 2015</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands, except per share
data)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE</B>&nbsp;<B>2&nbsp;&mdash;&nbsp;Securities
</B>(Continued)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 96%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>December
    31, 2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; text-decoration: none">
    <TD NOWRAP STYLE="text-align: center; text-decoration: none; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-decoration: none; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; text-decoration: none; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Amortized <BR>
    Cost</B></FONT></TD><TD STYLE="text-decoration: none; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-decoration: none; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; text-decoration: none; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Fair <BR> Value</B></FONT></TD><TD STYLE="text-decoration: none; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Government agency debentures</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.125in">Due from one to five years</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.125in">Five to ten years</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-align: left">Mortgage-backed securities - agency</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">16,417</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">16,012</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">CMO&rsquo;s &ndash; agency</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">77,677</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">76,633</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 0.125in">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">94,094</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">92,645</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Mortgage-backed securities
included all residential pass-through certificates guaranteed by FHLMC, FNMA, or GNMA and the CMO&rsquo;s are backed by government
agency pass-through certificates. The 2016 and 2015 pass-through certificates are fixed rate instruments. CMO&rsquo;s, by virtue
of the underlying residential collateral or structure, are fixed rate current pay sequentials or planned amortization classes (PAC&rsquo;s).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">When purchasing investment
securities, the Company&rsquo;s overall interest-rate risk profile is considered as well as the adequacy of expected returns relative
to risks assumed, including prepayments. In continuously managing the investment securities portfolio, management occasionally
sells investment securities in response to, or in anticipation of, changes in interest rates and spreads, actual or anticipated
prepayments, liquidity needs and credit risk associated with a particular security.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The proceeds from
sales and calls of securities and the associated gains and losses are listed below:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4.2in; text-align: left">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 75%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>2015</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%; text-align: left">Proceeds</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">4,068</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Gross gains</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Gross losses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The tax provision
related to these gains was $2 for 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">At December&nbsp;31,
2016, securities having a fair value of $76,633 were pledged to the FHLB for borrowing capacity totaling $72,837. At December&nbsp;31,
2015, securities having a fair value of $73,100 were pledged to the FHLB for borrowing capacity totaling $69,400. At December&nbsp;31,
2016 and 2015, the Company had no outstanding FHLB advances.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">At December&nbsp;31,
2016, securities having a fair value of $16,012 were pledged to the FRB of New&nbsp;York for borrowing capacity totaling $15,580.
At December&nbsp;31, 2015, securities having a fair value of $11,100 were pledged to FRB of New York for borrowing capacity totaling
$10,800. At December&nbsp;31, 2016 and 2015, the Company had no outstanding FRB borrowings.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The following table
provides the gross unrealized losses and fair value, aggregated by investment category and length of time the individual securities
have been in a continuous unrealized loss position, as of December&nbsp;31:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 96%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Less Than
    12 Months</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>12 Months
    or Longer</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Gross</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Gross</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Gross</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Fair</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Unrealized</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Fair</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Unrealized</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Fair</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Unrealized</B></FONT></TD><TD><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Value</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Losses</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Value</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Losses</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Value</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Losses</B></FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: left; text-indent: -0.1in; padding-left: 0.1in">December 31, 2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 22%; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Mortgage-backed securities &ndash; agency</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">13,936</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(417</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">13,936</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(417</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">CMO&rsquo;s - agency</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">50,269</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(859</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,973</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(241</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">56,242</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,100</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Total temporarily impaired securities</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">64,205</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(1,276</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5,973</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(241</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">70,178</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(1,517</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: -4.5pt"><B>&nbsp;</B></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ESQUIRE FINANCIAL HOLDINGS, INC</B>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>December&nbsp;31, 2016 and 2015</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands, except per share
data)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: -4.5pt"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: -4.5pt"><B>NOTE</B>&nbsp;<B>2&nbsp;&mdash;&nbsp;Securities
</B>(Continued)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 96%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Less Than
    12 Months</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>12 Months
    or Longer</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Gross</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Gross</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Gross</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Fair</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Unrealized</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Fair</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Unrealized</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Fair</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Unrealized</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Value</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Losses</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Value</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Losses</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Value</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Losses</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: left; text-indent: -0.1in; padding-left: 0.1in">December 31, 2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 22%; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Government agency debentures</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">2,029</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(34</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">1,972</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(29</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">4,001</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(63</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Mortgage-backed securities &ndash; agency</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,310</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(240</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,228</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(85</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14,538</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(325</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">CMO&rsquo;s  - agency</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">23,401</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(147</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">7,687</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(325</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">31,088</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(472</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Total temporarily impaired securities</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">35,740</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(421</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">13,887</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(439</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">49,627</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(860</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Management reviews
the investment portfolio on a quarterly basis to determine the cause, magnitude and duration of declines in the fair value of each
security. In estimating other-than-temporary impairment (OTTI), management considers many factors including: (1)&nbsp;the length
of time and extent that fair value has been less than cost, (2)&nbsp;the financial condition and near term prospects of the issuer,
(3)&nbsp;whether the market decline was affected by macroeconomic conditions, and (4)&nbsp;whether the Company has the intent to
sell the security or more likely than not will be required to sell the security before its anticipated recovery. If either of the
criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized
as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split
into two components as follows: (1)&nbsp;OTTI related to credit loss, which must be recognized in the income statement and (2)&nbsp;OTTI
related to other factors, which is recognized in other comprehensive income. The credit loss is defined as the difference between
the present value of the cash flows expected to be collected and the amortized cost basis. The assessment of whether any other
than temporary decline exists may involve a high degree of subjectivity and judgment and is based on the information available
to management at a point in time. Management evaluates securities for OTTI at least on a quarterly basis, and more frequently when
economic or market conditions warrant such an evaluation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">At December&nbsp;31,
2016, securities in unrealized loss positions were issuances from government sponsored entities. Due to the decline in fair value
attributable to changes in interest rates and illiquidity, not credit quality and because the Company does not have the intent
to sell the securities and it is likely that it will not be required to sell the securities before their anticipated recovery,
the Company does not consider the securities to be other-than-temporarily impaired at December&nbsp;31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">No impairment charges
were recorded in 2016 and 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ESQUIRE FINANCIAL HOLDINGS, INC</B>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>December&nbsp;31, 2016 and 2015</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands, except per share
data)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE&nbsp;3&nbsp;&mdash;&nbsp;Loans</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The composition of
loans by class is summarized as follows at December&nbsp;31:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 96%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom; text-decoration: none">
    <TD NOWRAP STYLE="text-align: center; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>%
    of <BR> Total</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>2015</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>%
    of <BR> Total</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 48%; text-align: left; text-indent: -0.1in; padding-left: 0.1in">1-4 family residential</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">49,597</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">18</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">28,531</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">13</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Commercial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">106,064</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">83,563</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">37</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Multifamily</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">83,410</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">71,184</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">32</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Commercial real estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22,198</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21,272</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,610</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,297</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Consumer</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10,571</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">13,556</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Total Loans</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">277,450</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">223,403</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">100</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Deferred costs and unearned premiums, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,128</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,116</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Allowance for loan losses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(3,413</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,799</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 27pt">Net loans</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">275,165</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">221,720</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><FONT STYLE="text-underline-style: double">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The following tables
present the activity in the allowance for loan losses by class for the years ending December&nbsp;31, 2016 and 2015:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 96%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>1-4 Family</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Commercial</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Residential</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Commercial</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Multifamily</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Real Estate</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Construction</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Consumer</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: left; text-indent: -0.1in; padding-left: 0.1in">December 31, 2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Allowance for loan losses:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 44%; text-align: left; padding-left: 0.25in; text-indent: -0.125in">Beginning balance</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 5%; text-align: right">213</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 5%; text-align: right">1,536</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 5%; text-align: right">533</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 5%; text-align: right">230</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 5%; text-align: right">134</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 5%; text-align: right">153</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 5%; text-align: right">2,799</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in; text-indent: -0.125in">Provision (credit) for loan losses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">147</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">372</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">88</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(27</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">595</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Recoveries</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">26</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">26</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.25in; text-indent: -0.125in">Loans charged-Off</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(7</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(7</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 0.25in">Total ending allowance balance</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">360</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,934</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">621</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">238</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">141</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">119</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,413</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: none; text-align: left; text-indent: 0; padding-left: 0">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-decoration: underline; text-align: left; text-indent: -0.1in; padding-left: 0.1in">December 31, 2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Allowance for loan losses:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in; text-indent: -0.125in">Beginning balance</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">162</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1,222</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">528</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">97</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">27</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">129</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">2,165</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.25in; text-indent: -0.125in">Provision (credit) for loan losses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">51</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">610</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">133</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">107</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">24</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">930</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Recoveries</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Loans charged-off</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(296</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(296</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 0.25in; text-indent: -0.125in">Total ending allowance balance</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">213</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,536</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">533</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">230</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">134</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">153</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,799</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><FONT STYLE="text-underline-style: double">&nbsp;</FONT></P>


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ESQUIRE FINANCIAL HOLDINGS, INC</B>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>December&nbsp;31, 2016 and 2015</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands, except per share
data)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE&nbsp;3&nbsp;&mdash;&nbsp;Loans
</B>(Continued)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The following tables
present the balance in the allowance for loan losses and the recorded investment in loans by class and based on impairment method
as of December&nbsp;31, 2016 and 2015:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 96%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>1-4 Family</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Commercial</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Residential</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Commercial</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Multifamily</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Real Estate</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Construction</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Consumer</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: left">December 31, 2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Allowance for loan losses:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.25in; text-indent: -0.125in">Ending allowance</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in; text-indent: -0.125in">Balance attributable to loans:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.375in; text-indent: -0.125in">Individually evaluated for impairment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 44%; text-align: left; padding-bottom: 1pt; padding-left: 0.5in; text-indent: -0.125in">Collectively evaluated for impairment</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; border-bottom: Black 1pt solid; text-align: right">360</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; border-bottom: Black 1pt solid; text-align: right">1,934</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; border-bottom: Black 1pt solid; text-align: right">621</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; border-bottom: Black 1pt solid; text-align: right">238</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; border-bottom: Black 1pt solid; text-align: right">141</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; border-bottom: Black 1pt solid; text-align: right">119</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; border-bottom: Black 1pt solid; text-align: right">3,413</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in; text-indent: -0.125in">Total ending allowance balance</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">360</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,934</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">621</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">238</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">141</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">119</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,413</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Loans:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.25in; text-indent: -0.125in">Loans individually evaluated for impairment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Loans collectively evaluated for impairment</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">49,597</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">106,064</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">83,410</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">22,198</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,610</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10,571</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">277,450</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Total ending loans balance</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">49,597</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">106,064</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">83,410</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">22,198</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5,610</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">10,571</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">277,450</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Recorded investment
is not adjusted for accrued interest, unearned premiums or deferred costs due to immateriality.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ESQUIRE FINANCIAL HOLDINGS, INC</B>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>December&nbsp;31, 2016 and 2015</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Dollars in thousands, except per share
data)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>NOTE 3 &mdash; Loans </B>(Continued<B>)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 96%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>1-4 Family</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Commercial</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Residential</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Commercial</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Multifamily</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Real Estate</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Construction</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Consumer</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: left">December 31, 2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Allowance for loan losses:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Ending allowance</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.375in; text-indent: -0.125in">Balance attributable to loans:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.5in; text-indent: -0.125in">Individually evaluated for impairment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 44%; text-align: left; padding-bottom: 1pt; padding-left: 0.5in; text-indent: -0.125in">Collectively evaluated for impairment</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; border-bottom: Black 1pt solid; text-align: right">213</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; border-bottom: Black 1pt solid; text-align: right">1,536</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; border-bottom: Black 1pt solid; text-align: right">533</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; border-bottom: Black 1pt solid; text-align: right">230</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; border-bottom: Black 1pt solid; text-align: right">134</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; border-bottom: Black 1pt solid; text-align: right">153</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; border-bottom: Black 1pt solid; text-align: right">2,799</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 0.25in; text-indent: -0.125in">Total ending allowance balance</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">213</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,536</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">533</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">230</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">134</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">153</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,799</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Loans:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.25in; text-indent: -0.125in">Loans individually evaluated for impairment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.25in; text-indent: -0.125in">Loans collectively evaluated for impairment</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">28,531</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">83,563</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">71,184</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">21,272</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,297</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">13,556</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">223,403</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 0.25in; text-indent: -0.125in">Total ending loans balance</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">28,531</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">83,563</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">71,184</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">21,272</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5,297</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">13,556</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">223,403</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Non-Performing Loans</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">Non-performing loans
include loans 90 days past due and still accruing and non-accrual loans. At December 31, 2016 and 2015, none of the Company&rsquo;s
loans met these conditions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">The following tables
present the aging of the recorded investment in past due loans by class of loans as of December&nbsp;31, 2016 and 2015:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 96%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>30 - 59</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>60 - 89</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Greater than</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Days</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Days</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>90 Days</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>Loans Not</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Past Due</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Past Due</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Past Due</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Past Due</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Past Due</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: left; text-indent: -0.1in; padding-left: 0.1in">December 31, 2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 22%; text-align: left; text-indent: -0.1in; padding-left: 0.1in">1-4 family residential</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">203</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">203</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">49,394</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">49,597</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Commercial</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">106,064</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">106,064</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Multifamily</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">83,410</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">83,410</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Commercial real estate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22,198</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22,198</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Construction</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,610</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,610</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Consumer</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10,571</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10,571</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">203</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">203</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">277,247</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">277,450</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><FONT STYLE="text-underline-style: double">&nbsp;</FONT></P>


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    <!-- Field: /Page -->

<P STYLE="margin: 0"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>ESQUIRE
FINANCIAL HOLDINGS, INC</B>.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>December&nbsp;31,
2016 and 2015</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>(Dollars
in thousands, except per share data)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>NOTE&nbsp;3&nbsp;&mdash;&nbsp;Loans
</B>(Continued)</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 96%; font: 9pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>30 - 59</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>60 - 89</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Greater than</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Days</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Days</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>90 Days</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Loans Not</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Past Due</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Past Due</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Past Due</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Past Due</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Past Due</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: justify"><FONT STYLE="font-size: 10pt">December&nbsp;31, 2015</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 22%; text-align: justify"><FONT STYLE="font-size: 10pt">1-4 family residential</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">28,531</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">28,531</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Commercial</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right">-</TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">83,563</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">83,563</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Multifamily</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">71,184</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">71,184</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Commercial real estate</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">21,272</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">21,272</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Construction</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">5,297</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">5,297</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Consumer</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">13,556</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">13,556</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">Total</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">223,403</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">223,403</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><I>Credit
Quality Indicators</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">The
Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt
such as: current financial information, historical payment experience, credit documentation, public information, and current economic
trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis
is performed whenever a credit is extended, renewed or modified, or when an observable event occurs indicating a potential decline
in credit quality, and no less than annually for large balance loans.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">The
Company uses the following definitions for risk ratings:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt"><U>Special
Mention</U> - Loans classified as special mention have a potential weakness that deserves management's close attention. If left
uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's
credit position at some future date.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt"><U>Substandard
</U>- Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or
of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation
of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies
are not corrected.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt"><U>Doubtful </U>-
Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added
characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts,
conditions, and values, highly questionable and improbable.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">Loans
not meeting the criteria above that are analyzed individually as part of the above described process are considered to be
pass rated loans.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">Based
on the most recent analysis performed, the risk category of loans by class of loans is as follows:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 96%; font: 9pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="text-align: justify; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Special</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="text-align: justify; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Pass</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Mention</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Substandard</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Doubtful</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: justify"><FONT STYLE="font-size: 10pt">December 31, 2016</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 48%; text-align: justify"><FONT STYLE="font-size: 10pt">1-4 family residential</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">49,597</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Commercial</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">105,777</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">287</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Multifamily</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">83,410</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Commercial real estate</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">22,198</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Construction</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">5,610</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Consumer</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">10,571</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">Total</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">277,163</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">287</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>ESQUIRE
FINANCIAL HOLDINGS, INC</B>.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>December&nbsp;31,
2016 and 2015</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>(Dollars
in thousands, except per share data)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>NOTE&nbsp;3&nbsp;&mdash;&nbsp;Loans
</B>(Continued)</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 96%; font: 9pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Special</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Pass</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Mention</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Substandard</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Doubtful</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: justify"><FONT STYLE="font-size: 10pt">December 31, 2015</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 48%; text-align: justify"><FONT STYLE="font-size: 10pt">1-4 family residential</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">28,531</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Commercial</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">80,765</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">2,798</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Multifamily</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">71,184</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Commercial real estate</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">21,272</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Construction</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">5,297</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Consumer</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">13,556</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">Total</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">220,605</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">2,798</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">The
Company considers the performance of the loan portfolio and its impact on the allowance for loan losses. For residential and consumer
loan classes, the Company evaluates credit quality based on the aging status of the loan, which was previously presented, and
by payment activity.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">The
Company has no loans identified as troubled debt restructurings at December&nbsp;31, 2016 and 2015. Furthermore, there were
no loan modifications during 2016 and 2015 that were troubled debt restructurings. In order to determine whether a borrower
is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment
default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the
Company&rsquo;s internal underwriting policy.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><I>Related
Party Loans</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">Loans
to related parties include loans to directors, their related companies and executive officers of the Company.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">Loans
to principal officers, directors, and their affiliates during 2016 were as follows:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 87%; text-align: justify"><FONT STYLE="font-size: 10pt">Beginning balance</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">6,800</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">New advances</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">100</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Repayments</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">(3,536</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">Ending balance</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">3,364</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.05in; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 22.5pt"><FONT STYLE="font-size: 10pt">Deposits
from principal officers, directors, and their affiliates at year-end 2016 and 2015 were $4,944 and $6,143.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>NOTE&nbsp;4&nbsp;&mdash;&nbsp;Premises
and Equipment</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">The
following is a summary of premises and equipment at December&nbsp;31:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 96%; font: 9pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="font-size: 8pt; text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>2015</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-size: 10pt; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%; text-align: justify"><FONT STYLE="font-size: 10pt">Leasehold improvements</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">1,575</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">176</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Equipment</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">2,876</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">1,947</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Construction in progress</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">23</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">4,451</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">2,146</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Less: accumulated depreciation and amortization</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">(1,684</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">(1,817</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">Total premises and equipment, net</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">2,767</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">329</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><FONT STYLE="font-size: 10pt; text-underline-style: double">&nbsp;</FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><FONT STYLE="font-size: 10pt; text-underline-style: double">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>ESQUIRE
FINANCIAL HOLDINGS, INC</B>.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>December&nbsp;31,
2016 and 2015</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>&nbsp;(Dollars
in thousands, except per share data)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>NOTE&nbsp;4&nbsp;&mdash;&nbsp;Premises
and Equipment </B>(Continued)</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">Depreciation
and amortization of premises and equipment, reflected as a component of occupancy and equipment, net in the statements of income,
was $166 and $237 for the periods ended December&nbsp;31, 2016 and 2015, respectively. At year end 2016, management closed its
New York City administrative office. This resulted in a $221 expense comprised of leasehold improvements written off and accrual
of the remaining lease obligation.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>NOTE&nbsp;5&nbsp;&mdash;&nbsp;Deposits</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">The
contractual maturities of certificates of deposit at December&nbsp;31, 2016, are as follows:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 75%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="text-align: justify; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 82%; font-size: 9pt; text-align: justify"><FONT STYLE="font-size: 10pt">2017</FONT></TD><TD STYLE="width: 1%; font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 15%; font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">22,335</FONT></TD><TD STYLE="width: 1%; font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 9pt; text-align: justify; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">2018</FONT></TD><TD STYLE="font-size: 9pt; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">1,620</FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 9pt; text-align: justify; padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">Total</FONT></TD><TD STYLE="font-size: 9pt; padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">23,955</FONT></TD><TD STYLE="padding-bottom: 2.5pt; font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><FONT STYLE="font-size: 10pt; text-underline-style: double">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">Certificates
of deposits greater than $250 were $751 as of December&nbsp;31, 2016, and $745 at December 31, 2015. CDARS reciprocal deposits
totaled approximately $15,800 at December&nbsp;31, 2016 and $1,800 at December 31, 2015.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>NOTE&nbsp;6&nbsp;&mdash;&nbsp;Secured
Borrowings</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">The
Company had a secured borrowing of $371 and $381 as of December&nbsp;31, 2016 and 2015, respectively, relating to certain loan
participations sold by the Company that did not qualify for sales treatment.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>NOTE&nbsp;7&nbsp;&mdash;&nbsp;Income
Taxes </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">The
following summarizes components of income tax expense for the years ended December&nbsp;31:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 96%; font: 9pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="font-size: 8pt; text-align: left"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>2015</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Current</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-align: left; padding-left: 9pt"><FONT STYLE="font-size: 10pt">Federal expense</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">147</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">37</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt"><FONT STYLE="font-size: 10pt">State and city expense</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">98</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">82</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in"><FONT STYLE="font-size: 10pt">Total current tax expense</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">245</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">119</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Deferred</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt"><FONT STYLE="font-size: 10pt">Federal expense</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">1,474</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">641</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt"><FONT STYLE="font-size: 10pt">State and city expense</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">47</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">(96</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.25in"><FONT STYLE="font-size: 10pt">Tax expense</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">1,521</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">545</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 9pt"><FONT STYLE="font-size: 10pt">Tax expense</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">1,766</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">664</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><FONT STYLE="font-size: 10pt; text-underline-style: double">&nbsp;</FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><FONT STYLE="font-size: 10pt; text-underline-style: double">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>ESQUIRE
FINANCIAL HOLDINGS, INC</B>.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>December&nbsp;31,
2016 and 2015</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>&nbsp;(Dollars
in thousands, except per share data)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><FONT STYLE="font-size: 10pt; text-underline-style: double">&nbsp;</FONT>&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>NOTE&nbsp;7&nbsp;&mdash;&nbsp;Income
Taxes </B>(Continued)</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">The
following is a reconciliation of the Company&rsquo;s statutory federal income tax rate of 34% to its effective tax rate at December&nbsp;31:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 96%; font: 9pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>2015</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%; text-align: left"><FONT STYLE="font-size: 10pt">Federal tax expense at statutory rate</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">1,560</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">624</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">State and local income taxes, net of federal income tax expense</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">97</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(16</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Incentive stock options</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">71</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">4</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Change to deferred tax as a result of tax reform</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">16</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Other</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">38</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">36</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 0.125in"><FONT STYLE="font-size: 10pt">Net tax expense</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">1,766</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">664</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">The
following summarizes the components of the Company&rsquo;s deferred tax assets and deferred tax liabilities at December&nbsp;31:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 96%; font: 9pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>2015</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Deferred tax assets:</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-align: left; padding-left: 9pt"><FONT STYLE="font-size: 10pt">Net operating loss carry forwards</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">1,136</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">2,516</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt"><FONT STYLE="font-size: 10pt">Pre-opening costs</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">172</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">208</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt"><FONT STYLE="font-size: 10pt">Stock options expense</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">308</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">236</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt"><FONT STYLE="font-size: 10pt">Allowance for loan loss</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">1,208</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">954</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt"><FONT STYLE="font-size: 10pt">Fixed assets</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(31</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">136</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt"><FONT STYLE="font-size: 10pt">Unrealized loss on securities available-for-sale</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">565</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">283</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt"><FONT STYLE="font-size: 10pt">Other</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">145</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">81</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.25in"><FONT STYLE="font-size: 10pt">Total deferred tax assets</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">3,503</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">4,414</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Deferred tax liabilities:</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt"><FONT STYLE="font-size: 10pt">Deferred rent</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(43</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt"><FONT STYLE="font-size: 10pt">Deferred loan fees</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">(352</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">(67</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.25in"><FONT STYLE="font-size: 10pt">Total deferred tax liabilities</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">(395</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">(67</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">Net deferred tax assets</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">3,108</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">4,347</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">The
Company has federal, state, and city net operating loss carryforwards of $2,168, $9,743, and $2,714, respectively, as of December&nbsp;31,
2016. The net operating losses are available to reduce future taxable income. They begin to expire in 2026.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">Realization
of deferred tax assets is dependent upon the generation of future taxable income. A valuation allowance is provided when it more
likely than not that some portion of the deferred tax asset will not be realized. Based on its evaluation, the Company has determined
that it is more likely than not that the deferred tax asset as of December 31, 2016 and 2015, will be realized.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">The
Company does not have any unrecognized tax benefits at December&nbsp;31, 2016 or 2015, and does not expect this to increase significantly
in the next twelve months. There were no interest and penalties recorded in the statements of operations for the years ended December&nbsp;31,
2016 and 2015. The Company is subject to U.S. federal income tax as well as income tax of the state of New York and New York City.
The Company is no longer subject to examination by taxing authorities for years before 2013.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>ESQUIRE
FINANCIAL HOLDINGS, INC</B>.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>December&nbsp;31,
2016 and 2015</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>&nbsp;(Dollars
in thousands, except per share data)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>NOTE&nbsp;8&nbsp;&mdash;&nbsp;Savings
Plan</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">A
savings plan is maintained under section&nbsp;401(k) of the Internal Revenue Code and covers substantially all current full-time
employees. Newly hired employees can elect to participate in the savings plan after completing one month of service. Under the
provisions of the savings plan, the Company does not match funds for employee contributions. Participants can invest their account
balances into several investment alternatives.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>NOTE&nbsp;9&nbsp;&mdash;&nbsp;Share-Based
Payment Plans </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><I>Stock
Option Plan</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">The
Company issues incentive and non-statutory stock options (&ldquo;options&rdquo;) to certain employees and directors pursuant to
the 2007 Stock Option Plan (&ldquo;the Plan&rdquo;), which has been approved by the stockholders. Options to purchase common stock
are granted by the Compensation Committee of the Board of Directors. The Plan allows for a maximum of 270,000&nbsp;shares of common
stock to be issued. As of December 31, 2016, 269,500 shares have been issued.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">On
May 26, 2011, the stockholders of the Company approved the Company&rsquo;s 2011 Stock Compensation Plan (the &ldquo;Stock Plan&rdquo;).
The Plan allows for a maximum of 404,607&nbsp;shares of common stock to be issued. On August 26, 2015, the stockholders of the
Company approved an amendment to the Company&rsquo;s 2011 Stock Compensation Plan to authorize an additional 350,000 shares for
issuance under the plan. The Company has issued 754,545 shares under the 2011 Stock Compensation Plan as of December&nbsp;31,
2016.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">Under
the Stock Option Plans, options are granted with an exercise price equal to the fair value of the Company&rsquo;s stock at the
date of the grant. Options granted vest on five annual installments (20% per annum) and have ten year contractual terms. All options
provide for accelerated vesting upon a change in control (as defined in the Plan). Stock options exercised result in the issuance
of new shares.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">The
fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model
that uses the assumptions noted in the table below. Expected volatilities are based on peer volatility. The Company uses peer
data to estimate option exercise and post-vesting termination behavior. The expected term of options granted is based on peer
data and represents the period of time that options granted are expected to be outstanding, which takes into account that the
options are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury
yield curve in effect at the time of the grant.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">The
fair value of options granted was determined using the following weighted-average assumptions as of grant date.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 85%; font: 9pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="font-size: 8pt; text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>2015</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-size: 11pt; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 11pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 11pt; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 11pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 11pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 11pt; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 11pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%; text-align: left"><FONT STYLE="font-size: 10pt">Risk-Free Interest Rate</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">1.44</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">%</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">1.88</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Expected Term</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-size: 10pt">84 months</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-size: 10pt">84 months</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Expected Stock Price Volatility</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-size: 10pt">24.1</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">%</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-size: 10pt">19.9</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Dividend Yield</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-size: 10pt">0.0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">%</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="text-align: right"><FONT STYLE="font-size: 10pt">0.0</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">%</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">The
weighted average fair value of options granted was $3.61 and $3.27 in 2016 and 2015.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>ESQUIRE
FINANCIAL HOLDINGS, INC</B>.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>December&nbsp;31,
2016 and 2015</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>&nbsp;(Dollars
in thousands, except per share data)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>NOTE&nbsp;9&nbsp;&mdash;&nbsp;Share-Based
Payment Plans </B>(Continued)</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">The
following table presents a summary of the activity related to options as of December&nbsp;31, 2016:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 96%; font: 9pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="font-size: 8pt; text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Weighted</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="font-size: 8pt; text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Weighted</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Average</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="font-size: 8pt; text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Average</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Remaining</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="font-size: 8pt; text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Exercise</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Contractual</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="font-size: 8pt; text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Options</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Price</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Life (Years)</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: left"><FONT STYLE="font-size: 10pt">December 31, 2016</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 61%; text-align: left"><FONT STYLE="font-size: 10pt">Outstanding at beginning of year</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">690,545</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">11.95</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 10%; font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Granted</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">333,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">12.50</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Exercised</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Forfeited</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">Outstanding at year end</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">1,024,045</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">12.13</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">7.33</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">Vested or expected to vest</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">1,024,045</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">12.13</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">7.33</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">Exercisable at year end</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">333,201</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">11.35</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">3.62</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">The Company
recognized compensation expense related to options of $388 and $138 for the years ended December&nbsp;31, 2016 and 2015, respectively.
At December&nbsp;31, 2016, unrecognized compensation cost related to non-vested options was approximately $2,200 and is expected
to be recognized over a weighted average period of 4.08 years. The intrinsic value for outstanding, vested or expected to vest,
and exercisable options at December&nbsp;31, 2016, was approximately $400 for all three categories.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>NOTE&nbsp;10&nbsp;&mdash;&nbsp;Earnings
per Common Share</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">The
two-class method is used in the calculation of basic and diluted earnings per share. Under the two-class method, earnings available
to common shareholders for the period are allocated between common shareholders and participating securities according to participation
rights in undistributed earnings. The factors used in earnings per share computation follow:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 96%; font: 9pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="font-size: 8pt; text-align: justify; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>2015</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: left"><FONT STYLE="font-size: 10pt">Basic</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-align: left"><FONT STYLE="font-size: 10pt">Net income available to common shareholders</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">2,822</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">1,172</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Less: Earnings allocated to participating
    securities</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">62</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">40</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Net income allocated to common shareholders</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">2,760</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">1,132</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Weighted average common shares outstanding</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">4,958,655</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">4,460,098</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Basic earnings per common share</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">0.56</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">0.25</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-decoration: underline; text-align: left"><FONT STYLE="font-size: 10pt">Diluted</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Net income allocated to common shareholders for basic earnings
    per share</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">2,760</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">1,132</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Weighted average shares outstanding for basic earnings per common
    share</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">4,958,655</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">4,460,098</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Add: Dilutive effects of assumed exercises
    of stock options</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">30,550</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">30,550</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">Average shares and dilutive potential common
    shares</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">4,989,205</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">4,490,648</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Diluted earnings per common share</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">0.55</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">0.25</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">Stock
options totaling 837,170 and 537,795 shares of common stock were not considered in computing diluted earnings per common share
for 2016 and 2015 because they were anti-dilutive. &#9;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>ESQUIRE
FINANCIAL HOLDINGS, INC</B>.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>December&nbsp;31,
2016 and 2015</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B><FONT STYLE="font-size: 10pt"><B>&nbsp;(Dollars
in thousands, except per share data)</B></FONT></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>NOTE&nbsp;11&nbsp;&mdash;&nbsp;Commitments
and Contingent Liabilities</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><I>Change-In-Control
Arrangements</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">Certain
key executive officers have arrangements that provide for the payment of a multiple of base salary, should a change-in control,
as defined, occur. These payments are limited under guidelines for deductibility pursuant to the Internal Revenue Code.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><I>Credit
Related Commitments</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">The
Company provides the following types of off-balance sheet financial products to customers:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">Commitments
to extend credit are agreements to lend to customers in accordance with contractual provisions. These commitments usually have
fixed expiration dates or other termination clauses and may require the payment of a fee. Total commitments outstanding do not
necessarily represent future cash flow requirements, since many commitments expire without being funded.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">Each
customer&rsquo;s creditworthiness is evaluated prior to issuing these commitments and may require the customer to pledge certain
collateral (i.e., inventory, income-producing property) prior to the extension of credit. Fixed rate commitments are subject to
interest rate risk based on changes in prevailing rates during the commitment period. The Company is subject to credit risk in
the event that the commitments are drawn upon and the customer is unable to repay the obligation.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">Letters
of credit are irrevocable commitments issued at the request of customers. They authorize the beneficiary to draw drafts for payment
in accordance with the stated terms and conditions. Letters of credit substitute the Company&rsquo;s creditworthiness for that
of the customer and are issued for a fee commensurate with the risk.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">The
Company can issue two types of letters of credit: Commercial (documentary) Letters of Credit and Standby Letters of Credit. Commercial
Letters of Credit are commonly issued to finance the purchase of goods and are typically short term in nature. Standby Letters
of Credit are issued to back financial or performance obligations of a Bank customer, and are typically issued for periods up
to one year. Due to their long-term nature, standby letters of credit require adequate collateral in the form of cash or other
liquid assets. In most instances, standby letters of credit expire without being drawn upon.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">The
credit risk involved in issuing letters of credit is essentially the same as extending credit facilities to comparable customers.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">The
Company had $1,316 and $1,759 of fixed rate commitments to extend credit at December&nbsp;31, 2016 and 2015, respectively. The
Company had $730 and $769 of variable rate commitments to extend credit at December 31, 2016 and 2015. As of December&nbsp;31,
2016 and 2015, the Company had standby letters of credit totaling $1,259.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><I>Lease
Commitments</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">At
December&nbsp;31, 2016, the Company was obligated under several non-cancelable leases for certain premises and equipment. The
minimum annual rental commitments, exclusive of taxes and other charges, under non-cancelable lease agreements for premises at
December&nbsp;31, 2016, are summarized as follows:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 70%; font: 9pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="font-size: 8pt; text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Minimum</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="font-size: 8pt; text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Rentals</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-size: 10pt; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 10pt; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 82%; text-align: justify"><FONT STYLE="font-size: 10pt">2017</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 15%; text-align: right"><FONT STYLE="font-size: 10pt">489</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">2018</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">397</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">2019</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">399</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">2020</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">409</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">2021</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">419</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Thereafter</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">2,222</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">Total lease commitments</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">4,335</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>ESQUIRE
FINANCIAL HOLDINGS, INC</B>.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>December&nbsp;31,
2016 and 2015</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B><FONT STYLE="font-size: 10pt"><B>&nbsp;(Dollars
in thousands, except per share data)</B></FONT></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>NOTE&nbsp;11&nbsp;&mdash;&nbsp;Commitments
and Contingent Liabilities </B>(Continued)</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">These
leases contain periodic escalation clauses and all expiring leases are evaluated for extensions at renewal. Rent expense for the
years ended December&nbsp;31, 2016 and 2015, amounted to $573 and $531, respectively.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><I>Litigation</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">The
Company and its subsidiary are subject to certain pending and threatened legal actions that arise out of the normal course of
business. In the opinion of management at the present time, the resolution of any pending or threatened litigation will not have
a material adverse effect on its consolidated financial statements.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>NOTE&nbsp;12&nbsp;&mdash;&nbsp;Stockholders&rsquo;
Equity</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><I>Sale
of Common and Preferred Stock</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">In
2014, the Company, through various offerings during the year, sold an additional 583,967 shares of common stock, with total proceeds,
net of offering costs, of approximately $6,800. The net proceeds were used to support the Company&rsquo;s continued growth and
for general corporate purposes .</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">On
December 23, 2014, an investor executed the purchase of 157,985 shares of 0.00% Series B Non-Voting Preferred Shares at a price
of $12.50 per share for proceeds, net of offering costs, of approximately $1,800. The preferred stock does not have a maturity
date and is not convertible by the holder, but is convertible on a one for one basis into shares of common stock by us under certain
circumstances. In addition, the preferred stock does not have a liquidation preference. Preferred shares have equal rights to
receive dividends when dividends are declared on common stock, and thus are considered participating securities.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">During
2015, the Company sold 823,460 shares of common stock for a total of $9,800. The net proceeds were used to support the Company&rsquo;s
continued growth and for general corporate purposes.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">In
June 2016, the Company and the preferred shareholder agreed to perform an exchange of 91,000 shares of 0.00% of Series B Non-Voting
Preferred Shares for 91,000 voting common shares, par value $0.01.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>NOTE&nbsp;13&nbsp;&mdash;&nbsp;Fair
Value Measurements</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt"><U>Level
1</U> &ndash; Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability
to access as of the measurement date.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt"><U>Level
2</U> &ndash; 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt"><U>Level
3</U> &ndash; Significant unobservable inputs that reflect a company&rsquo;s own assumptions about the assumptions that market
participants would use in pricing an asset or liability.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">For
available-for-sale securities where quoted prices are not available, fair values are calculated based on market prices of similar
securities (Level 2).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>ESQUIRE
FINANCIAL HOLDINGS, INC</B>.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>December&nbsp;31,
2016 and 2015</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B><FONT STYLE="font-size: 10pt"><B>&nbsp;(Dollars
in thousands, except per share data)</B></FONT></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>NOTE&nbsp;13&nbsp;&mdash;&nbsp;Fair
Value Measurements </B>(Continued)</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">Assets
and liabilities measured at fair value on a recurring basis are summarized below:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 96%; font: 9pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="font-size: 8pt; text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="10" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Fair Value
    Measurements Using</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="font-size: 8pt; text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Quoted Prices</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Significant</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="font-size: 8pt; text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>In Active</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Other</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Significant</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="font-size: 8pt; text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Markets For</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Observable</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Unobservable</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="font-size: 8pt; text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Identical Assets</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Inputs</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Inputs</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; font-size: 8pt; text-decoration: none">
    <TD NOWRAP STYLE="font-size: 8pt; text-align: justify; text-decoration: none; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt; text-decoration: none; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt; text-decoration: none; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Level 1)</B></FONT></TD><TD STYLE="font-size: 8pt; text-decoration: none; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt; text-decoration: none; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt; text-decoration: none; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Level 2)</B></FONT></TD><TD STYLE="font-size: 8pt; text-decoration: none; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt; text-decoration: none; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt; text-decoration: none; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Level 3)</B></FONT></TD><TD STYLE="font-size: 8pt; text-decoration: none; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: left"><FONT STYLE="font-size: 10pt">December 31, 2016</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Assets</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt"><FONT STYLE="font-size: 10pt">Available-for-sale securities</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 61%; text-align: left; padding-left: 0.25in"><FONT STYLE="font-size: 10pt">Mortgage-backed securities -
    agency</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">16,012</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.25in"><FONT STYLE="font-size: 10pt">CMO&rsquo;s - agency</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">76,633</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 27pt"><FONT STYLE="font-size: 10pt">Total</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">92,645</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: left"><FONT STYLE="font-size: 10pt">December 31, 2015</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Assets</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt"><FONT STYLE="font-size: 10pt">Available-for-sale securities</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.25in"><FONT STYLE="font-size: 10pt">Government agency debentures</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">4,001</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.25in"><FONT STYLE="font-size: 10pt">Mortgage-backed securities - agency</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">17,147</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.25in"><FONT STYLE="font-size: 10pt">CMO&rsquo;s - agency</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">63,091</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 27pt"><FONT STYLE="font-size: 10pt">Total</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">84,239</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 9pt; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">There
were no transfers between Level 1 and Level 2 during the year. There were no assets measured on a non-recurring basis as of December
31, 2016 and 2015.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 9pt; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 9pt; text-align: justify"><FONT STYLE="font-size: 10pt"><I>Estimated
Fair Value of Financial Instruments</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 9pt; text-align: justify"><FONT STYLE="font-size: 10pt"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 9pt; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">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&rsquo;s entire holdings of a particular
financial instrument, or the tax consequences of realizing gains or losses on the sale of financial instruments.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 9pt; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 9pt; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">The
Company used the following method and assumptions in estimating the fair value of its financial instruments:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 9pt; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 9pt; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt"><U>Cash
and Due from Banks and Interest Earning Deposits</U>: Carrying amounts approximate fair value, since these instruments are either
payable on demand or have short-term maturities. Cash on hand and non-interest due from bank accounts are Level 1 and interest
bearing deposits are Level 2.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 9pt; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 9pt; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>ESQUIRE
FINANCIAL HOLDINGS, INC</B>.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>December&nbsp;31,
2016 and 2015</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B><FONT STYLE="font-size: 10pt"><B>&nbsp;(Dollars
in thousands, except per share data)</B></FONT></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 9pt; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>NOTE&nbsp;13&nbsp;&mdash;&nbsp;Fair
Value Measurements </B>(Continued)</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt"><U>Securities
Available-for-Sale</U>: The fair values for securities available-for-sale are determined by quoted market prices, 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&rsquo; relationship to other benchmark quoted securities (Level 2 inputs).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt"><U>Securities,
Restricted</U>: It is not practical to determine the fair value of FHLB and FRB stock due to restrictions placed on its transferability.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt"><U>Loans</U>:
The estimated fair values of real estate mortgage loans and other loans receivable are based on discounted cash flow
calculations that use available market benchmarks when establishing discount factors for the types of loans resulting in a
Level 3 classification. Exceptions may be made for adjustable rate loans (with resets of one year or less), which would be
discounted straight to their rate index plus or minus an appropriate spread. All nonaccrual loans are carried at their
current fair value, if applicable. The method utilized to determine fair value does not represent exit price.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt"><U>Accrued
Interest Receivable and Payable</U>: For these short-term instruments, the carrying amount is a reasonable estimate of the fair
value resulting in a Level 2 or 3 classification.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt"><U>Deposits</U>:
The estimated fair value of certificates of deposits are based on discounted cash flow calculations that use a replacement cost
of funds approach to establishing discount rates for certificates of deposits maturities resulting in a Level 2 classification.
Stated value is fair value for all other deposits resulting in a Level 1 classification.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt"><U>Secured
Borrowings</U>: Borrowings represent secured borrowings and carrying value is a reasonable estimate of fair value resulting in
a Level 2 classification.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt"><U>Off-Balance-Sheet
Liabilities</U>: The fair value of off-balance-sheet commitments to extend credit is estimated using fees currently charged to
enter into similar agreements. The fair value is immaterial as of December&nbsp;31, 2016 and 2015.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>ESQUIRE
FINANCIAL HOLDINGS, INC</B>.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>December&nbsp;31,
2016 and 2015</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>&nbsp;(Dollars
in thousands, except per share data)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>NOTE&nbsp;13&nbsp;&mdash;&nbsp;Fair
Value Measurements </B>(Continued)</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-size: 10pt">The
following table presents the carrying amounts and fair values of the Company&rsquo;s financial instruments:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="text-align: justify; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: justify; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="10" STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>Fair Value Measurement
    at</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: justify; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="text-align: justify; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>Carrying</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="10" STYLE="font-size: 8pt; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>December
    31, 2016, Using:</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: justify; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; text-decoration: none; font-size: 8pt">
    <TD NOWRAP STYLE="text-align: justify; text-decoration: none; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt; padding-bottom: 1pt; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; text-align: center; border-bottom: Black 1pt solid; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>Value</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt; padding-bottom: 1pt; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; text-align: center; border-bottom: Black 1pt solid; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>(Level
    1)</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt; padding-bottom: 1pt; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; text-align: center; border-bottom: Black 1pt solid; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>(Level
    2)</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt; padding-bottom: 1pt; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; text-align: center; border-bottom: Black 1pt solid; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>(Level
    3)</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt; padding-bottom: 1pt; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; text-align: center; border-bottom: Black 1pt solid; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 9pt; font-weight: bold; text-align: left"><FONT STYLE="font-size: 10pt">Financial Assets:</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 35%; font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">Cash and due from banks</FONT></TD><TD STYLE="width: 1%; font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">437</FONT></TD><TD STYLE="width: 1%; font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">437</FONT></TD><TD STYLE="width: 1%; font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="width: 1%; font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="width: 1%; font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">437</FONT></TD><TD STYLE="width: 1%; font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">Interest earning deposits</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">42,556</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">42,556</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">42,556</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">Securities available-for-sale</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">92,645</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">92,645</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">92,645</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">Securities, restricted</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">1,649</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">N/A</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">N/A</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">N/A</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">N/A</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">Loans, net of allowance</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">275,165</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">277,620</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">277,620</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">Accrued interest receivable</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">1,541</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">201</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">1,340</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">1,541</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 9pt; font-weight: bold; text-align: left"><FONT STYLE="font-size: 10pt">Financial Liabilities:</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">Certificates of deposit</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">23,955</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">23,930</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">23,930</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">Demand and other deposits</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">346,833</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">346,833</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">346,833</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">Secured borrowings</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">371</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">371</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">371</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">Accrued interest payable</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">3</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">3</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">3</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="text-align: left; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: justify; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="10" STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>Fair Value Measurement
    at</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: justify; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="text-align: left; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>Carrying</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="10" STYLE="font-size: 8pt; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>December
    31, 2015, Using:</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: justify; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="text-decoration: none; text-align: left; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt; text-decoration: none; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; text-decoration: none; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Value</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt; text-decoration: none; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; text-decoration: none; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Level
    1)</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt; text-decoration: none; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; text-decoration: none; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Level
    2)</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt; text-decoration: none; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; text-decoration: none; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>(Level
    3)</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt; text-decoration: none; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; text-decoration: none; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Total</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt; text-decoration: none"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 9pt; font-weight: bold; text-align: left"><FONT STYLE="font-size: 10pt">Financial Assets:</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 35%; font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">Cash and due from banks</FONT></TD><TD STYLE="width: 1%; font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">450</FONT></TD><TD STYLE="width: 1%; font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">450</FONT></TD><TD STYLE="width: 1%; font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="width: 1%; font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="width: 1%; font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%; font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">450</FONT></TD><TD STYLE="width: 1%; font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">Interest earning deposits</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">32,704</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">32,704</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">32,704</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">Securities available-for-sale</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">84,239</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">84,239</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">84,239</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">Securities, restricted</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">1,430</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">N/A</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">N/A</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">N/A</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">N/A</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">Loans, net of allowance</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">221,720</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">224,715</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">224,715</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">Accrued interest receivable</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">1,418</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">205</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">1,213</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">1,418</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 9pt; font-weight: bold; text-align: left"><FONT STYLE="font-size: 10pt">Financial Liabilities:</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">Certificates of deposit</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">9,900</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">9,881</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">9,881</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">Demand and other deposits</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">291,787</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">291,787</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">291,787</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">Secured borrowings</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">381</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">381</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">381</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">Accrued interest payable</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 9pt; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD><TD STYLE="font-size: 9pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>NOTE&nbsp;14&nbsp;&mdash;&nbsp;Capital</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">Banks
are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and additionally
for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities and certain off-balance
sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative
judgments by regulators. Failure to meet capital requirements can initiate regulatory action. The final rules of implementing
the Basel Committee on Banking Supervision&rsquo;s capital guidelines for U.S. Banks (Basel III rules) became effective for the
Company on January 1, 2015, with full compliance with all of the requirements being phased in over a multi-year schedule, and
fully phased in by January 1, 2019. The net unrealized gain or loss on available for sale securities is not included in computing
regulatory capital. Management believes as of December 31, 2016, the Bank met all capital adequacy requirements to which it is
subject.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>ESQUIRE
FINANCIAL HOLDINGS, INC</B>.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>December&nbsp;31,
2016 and 2015</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B><FONT STYLE="font-size: 10pt"><B>&nbsp;(Dollars
in thousands, except per share data)</B></FONT></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>NOTE&nbsp;14&nbsp;&mdash;&nbsp;Capital
</B>(Continued<B>)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">Prompt
corrective action regulations provide five classifications: well capitalized, adequately capitalized. Undercapitalized, significantly
undercapitalized and critically undercapitalized, although these terms are not used to represent overall financial condition.
If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions
are limited, as is asset growth and expansion, and capital restoration plans are required.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">As
of December 31, 2016, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as &ldquo;well
capitalized&rdquo; under the regulatory framework for prompt corrective action. To be categorized as &ldquo;well capitalized,&rdquo;
the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table below.
Since that notification, there are no conditions or events that management believes have changed the institution&rsquo;s category.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 96%; font: 9pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>For Capital</B></FONT></TD><TD STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>To be Well</B></FONT></TD><TD STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Required</B></FONT></TD><TD STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Adequacy Purposes</B></FONT></TD><TD STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Capitalized Under</B></FONT></TD><TD STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>For Capital</B></FONT></TD><TD STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Including Capital</B></FONT></TD><TD STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Prompt Corrective</B></FONT></TD><TD STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Actual</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Adequacy
    Purposes*</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Conservation
    Buffer(1)</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Action Regulations*</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Amount</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Ratio</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Amount</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Ratio</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="font-size: 8pt; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="font-size: 8pt; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Amount</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt; text-align: center"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Ratio</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Amount</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Ratio</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 10pt">December
    31, 2016</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 36%; text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 10pt">Total capital
    &nbsp;to risk weighted assets</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 10pt">50,974</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 10pt">17.25</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">%</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 10pt">23,642</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 10pt">8.00</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">%</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 10pt">25,489</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 10pt">8.63</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">%</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 10pt">29,552</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 5%; text-align: right"><FONT STYLE="font-size: 10pt">10.00</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 10pt">Tier 1 (core) capital
    to risk weighted assets</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">47,560</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">16.09</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">17,731</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">6.00</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">19,578</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">6.63</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">23,642</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">8.00</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 10pt">Tier 1 (common) capital
    <FONT STYLE="font-family: Times New Roman, Times, Serif">to risk weighted assets</FONT></FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">47,560</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">16.09</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">13,299</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">4.50</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">15,146</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">5.13</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">19,209</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">6.50</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 10pt">Tier 1 (core) capital
    to adjusted total assets</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">47,560</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">11.63</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">16,351</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">4.00</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">16,351</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">4.00</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">20,439</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">5.00</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-size: 10pt; text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="font-size: 10pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 10pt">December
    31, 2015</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 10pt">Total capital to risk
    weighted assets</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">41,425</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">17.06</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">%</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">19,426</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">8.00</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">%</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">n/a</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">n/a</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">24,282</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">10.00</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 10pt">Tier 1 (core) capital
    to risk weighted assets</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">38,626</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">15.91</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">14,567</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">6.00</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">n/a</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">n/a</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">19,422</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">8.00</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 10pt">Tier 1 (common) capital
    &nbsp;to risk weighted assets</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">38,626</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">15.91</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">10,925</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">4.50</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">n/a</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">n/a</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">15,781</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">6.50</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 10pt">Tier 1 (core) capital
    to adjusted total assets</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">38,626</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">11.90</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">12,984</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">4.00</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">n/a</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">n/a</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">16,229</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">5.00</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">*
</FONT><FONT STYLE="font-size: 10pt">BASEL III revised the capital adequacy requirements and the Prompt Corrective Action Framework
effective January&nbsp;1, 2015 for the Bank.</FONT></P>

<P STYLE="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><FONT STYLE="font-size: 10pt">(1)
When fully phased in on January 1, 2019, the Basel Rules will require the Bank to maintain a 2.5% &ldquo;capital conservation
buffer&rdquo; on top of the minimum risk-weighted asset ratios. The capital conservation buffer is designed to absorb losses during
periods of economic stress. Banking institutions with a (i) Common Equity Tier 1 capital to risk-weighted assets, (ii)Tier 1 capital
to risk-weighted assets or (iii) total capital to risk-weighted assets above the respective minimum but below the capital conservation
buffer will face constraints on dividends, equity repurchases and discretionary bonus payments to executive officers based on
the amount of the shortfall. The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level
and will increase by 0.625% on each subsequent January 1, until it reaches 2.5% on January 1, 2019.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: 0in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">In
December 2012, the Board of Directors of the Bank ratified maintaining Tier I Leverage Capital at least equal to 9%, Tier I Risk-Based
Capital at least equal to 11% and Total Risk-Based Capital at least equal to 13%.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>ESQUIRE
FINANCIAL HOLDINGS, INC</B>.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>December&nbsp;31,
2016 and 2015</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B><FONT STYLE="font-size: 10pt"><B>&nbsp;(Dollars
in thousands, except per share data)</B></FONT></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>NOTE&nbsp;15&nbsp;&mdash;&nbsp;Parent
Company Only Condensed Financial Information</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">Condensed
financial information of Esquire Financial Holdings, Inc. follows:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-size: 10pt">CONDENSED STATEMENTS
OF FINANCIAL CONDITION</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; padding-bottom: 1pt; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>At December
    31,</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>2015</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">ASSETS</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-align: justify">Cash and cash equivalents</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">4,473</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">7,459</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Investment in banking subsidiary</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">47,085</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">40,393</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Other assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">660</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,710</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 9pt">Total assets</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">52,218</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">49,562</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">LIABILITIES</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Due to subsidiary</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">90</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Other liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">32</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">47</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 9pt">Total liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">32</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">137</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Stockholders&rsquo; equity</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Preferred stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Common stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">49</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Additional paid-in-capital</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">58,845</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">58,456</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Retained deficit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(5,826</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(8,648</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Other comprehensive loss</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(884</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(434</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Total stockholders&rsquo; equity</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">52,186</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">49,425</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 0.25in">Total liabilities and equity</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">52,218</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">49,562</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt">CONDENSED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME&#9;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>For the Years Ended December 31,</B></FONT></TD><TD STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>2015</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%; text-align: justify">Interest income</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">100</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Other expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(620</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(540</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Loss before income tax and undistributed subsidiary income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(520</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(540</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Income tax benefit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(200</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(213</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Equity in undistributed subsidiary income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,142</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,499</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net income</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,822</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,172</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Comprehensive income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">2,372</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">988</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>ESQUIRE
FINANCIAL HOLDINGS, INC</B>.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>December&nbsp;31,
2016 and 2015</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>&nbsp;(Dollars
in thousands, except per share data)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>NOTE&nbsp;15&nbsp;&mdash;&nbsp;Parent
Company Only Condensed Financial Information </B>(Continued)</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 9pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-size: 10pt">CONDENSED STATEMENTS
OF CASH FLOWS</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>For the Years Ended December 31,</B></FONT></TD><TD STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="text-align: center; padding-bottom: 1pt; font-size: 8pt"></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>2015</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD NOWRAP STYLE="text-align: left">Cash flows from operating activities</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-align: left; padding-left: 25.5pt">Net income</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">2,822</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">1,172</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 25.5pt">Adjustments:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 25.5pt">Stock options expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">388</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">138</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 25.5pt">Equity in undistributed subsidiary income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,142</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,499</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 43.5pt">Change in other assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(200</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(213</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 43.5pt">Change in other liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right; text-decoration: none"><FONT STYLE="font-size: 10pt">(105</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(438</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Net cash used in operating activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(237</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(840</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0in">Cash flows from investing activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 25.5pt">Investments in subsidiaries</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(4,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,000</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 25.5pt">Other assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,250</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,250</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Net cash used in investing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,750</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(4,250</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Cash flows from financing activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 25.5pt">Proceeds from the issuance of common stock</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9,757</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Net cash from financing activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,757</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Net change in cash and cash equivalents</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,986</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,667</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Beginning cash and cash equivalents</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">7,459</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,792</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Ending cash and cash equivalents</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4,473</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">7,459</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>ESQUIRE
FINANCIAL HOLDINGS, INC</B>.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>December&nbsp;31,
2016 and 2015</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 10pt"><B><FONT STYLE="font-size: 10pt"><B>&nbsp;(Dollars
in thousands, except per share data)</B></FONT></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>NOTE&nbsp;16&nbsp;&mdash;&nbsp;Accumulated
Other Comprehensive Loss</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4.5pt; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">The
following is changes in accumulated other comprehensive loss by component, net of tax, for the years ending December 31, 2016
and 2015:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4.5pt; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>2015</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Unrealized Losses on</B></FONT></TD><TD STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Unrealized Losses on</B></FONT></TD><TD STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="text-align: left; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Year Ended December
    31,</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Available
    for Sale Securities</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Available
    for Sale Securities</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%; text-align: justify">Beginning balance</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(434</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(250</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Other comprehensive loss before reclassifications</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(454</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(184</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.125in; padding-left: 0.125in">Amounts reclassified from accumulated other comprehensive income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Net current period other comprehensive loss</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(450</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(184</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt">Ending balance</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(884</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(434</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4.5pt; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-size: 10pt">The
following represents the reclassifications out of accumulated other comprehensive income for the years ended December 31, 2016,
and 2015:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="text-align: center; vertical-align: top; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Twelve months ended</B></FONT></TD><TD STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="text-align: center; vertical-align: top; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="6" STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>December 31,</B></FONT></TD><TD STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP STYLE="text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Affected Line in the&nbsp;</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; font-size: 8pt">
    <TD NOWRAP STYLE="text-align: center; vertical-align: top; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>2016</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>2015</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></TD>
    <TD NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid; font-size: 8pt"><FONT STYLE="font-size: 8pt"><B>Consolidated
    Statement of Income</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 50%; text-align: left; vertical-align: top">Realized gain on securities sales, AFS</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">6</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 23%; text-align: left">Net gains on securities available-for-sale</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; vertical-align: top">Income tax expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">Income tax expense</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 9pt; vertical-align: top">Total reclassifications, net of tax</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: center; padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.05in; text-align: justify"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>








<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Until&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2017, all dealers that buy, sell or trade our common stock, whether or not participating in this offering, may be required to deliver
a prospectus. This is in addition to the dealers&rsquo; obligation to deliver a prospectus when acting as underwriter and with
respect to their unsold allotments or subscriptions. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>[<FONT STYLE="font-family: Symbol">&middot;</FONT>]
Shares</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><IMG SRC="t1701677_s1logo.jpg" ALT=""></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>COMMON STOCK</B></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PROSPECTUS</B></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><IMG SRC="t1701677_s1logo1.jpg" ALT=""></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-variant: small-caps"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">[<FONT STYLE="font-family: Symbol">&middot;</FONT>]<B>,
2017</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Neither we nor the underwriter has authorized anyone to provide
information different from that contained in this prospectus. When you make a decision about whether to invest in our common stock,
you should not rely upon any information other than the information in this prospectus. Neither the delivery of this prospectus
nor the sale of our common stock means that information contained in this prospectus is correct after the date of this prospectus.
This prospectus is not an offer to sell or solicitation of an offer to buy these shares of common stock in any circumstances under
which the offer or solicitation is unlawful.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1in; text-align: left"><B>PART II:</B></TD><TD STYLE="text-align: justify"><B>INFORMATION NOT REQUIRED IN PROSPECTUS</B></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1in; text-align: left"><B>Item 13.</B></TD><TD STYLE="text-align: justify"><B>Other Expenses of Issuance and Distribution</B></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in">The following table sets forth
all costs and expenses, other than underwriting discounts and commissions, in connection with the sale of shares of our common
stock being registered, all of which will be paid by us. All amounts shown are estimates, except for the SEC registration fee,
the FINRA filing fee and the NASDAQ listing fee.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 87%; text-align: justify">SEC registration fee</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right"><font style="font-size: 10pt">*</font></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">FINRA filing fee</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><font style="font-size: 10pt">*</font></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Listing fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><font style="font-size: 10pt">*</font></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Records Management Fees and Expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><font style="font-size: 10pt">*</font></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Printing fees and expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><font style="font-size: 10pt">*</font></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Legal and accounting fees and expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><font style="font-size: 10pt">*</font></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Transfer agent&rsquo;s fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><font style="font-size: 10pt">*</font></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Miscellaneous</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 10pt">*</font></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 10pt">&nbsp;*</font></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">*</TD><TD STYLE="text-align: justify">To be filed by amendment.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1in; text-align: left"><B>Item 14.</B></TD><TD STYLE="text-align: justify"><B>Indemnification of Directors and Officers</B></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in">Articles 10 and 11 of the
Articles of Incorporation of Esquire Financial Holdings, Inc. (the &ldquo;Corporation&rdquo;) set forth circumstances under which
directors, officers, employees and agents of the Corporation may be insured or indemnified against liability which they incur in
their capacities as such:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><B>ARTICLE&nbsp;10. Indemnification,
etc. of Directors and Officers.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><B>A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indemnification.
</B>The Corporation shall indemnify (1) its current and former directors and officers, whether serving the Corporation or at its
request any other entity, to the fullest extent required or permitted by the MGCL now or hereafter in force, including the advancement
of expenses under the procedures and to the fullest extent permitted by law, and (2)&nbsp;other employees and agents to such extent
as shall be authorized by the Board of Directors and permitted by law; provided, however, that, except as provided in Section&nbsp;B
hereof with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized
by the Board of Directors of the Corporation. The right to indemnification conferred in Section A of this Article 10 shall include
the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition
(hereinafter an &ldquo;advancement of expenses&rdquo;); provided, however, that if the MGCL requires an advancement of expenses
incurred by an indemnitee in his or her capacity as a director or officers (and not in any other capacity in which service was
or is rended by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery
to the Corporation of a written undertaking (hereinafter an &ldquo;undertaking&rdquo;), by or on behalf of such indemnitee, to
repay all amounts so advanced if it shall ultimately be determined by a final judicial decision from which there is no further
right to appeal that such indemnitee is not entitled to be indemnified for such expenses under Section A of this Article 10 or
otherwise.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><B>B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Procedure. </B>If
a claim under Section&nbsp;A of this Article&nbsp;10 is not paid in full by the Corporation within 60 days after a written claim
has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable
period shall be 20 days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement
of expenses pursuant to the terms of an undertaking, the indemnitee shall also be entitled to be reimbursed the expense of prosecuting
or defending such suit. It shall be a defense to any action for advancement of expenses that the Corporation has not received both
(i) an undertaking as required by law to repay such advances in the event it shall ultimately be determined that the standard of
conduct has not been met and (ii)&nbsp;a written affirmation by the indemnitee of his good</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0in">faith belief that the standard
of conduct necessary for indemnification by the Corporation has been met. In (i) any suit brought by the indemnitee to enforce
a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses)
it shall be a defense that, and (ii)&nbsp;any suit by the Corporation to recover an advancement of expenses pursuant to the terms
of an undertaking the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has
not met the applicable standard for indemnification set forth in the MGCL. Neither the failure of the Corporation (including its
Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard
of conduct set forth in the MGCL, nor an actual determination by the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption
that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be
a defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses
hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving
that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article&nbsp;10 or otherwise
shall be on the Corporation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><B>C.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-Exclusivity.
</B>The rights to indemnification and to the advancement of expenses conferred in this Article&nbsp;10 shall not be exclusive of
any other right which any Person may have or hereafter acquire under any statute, these Articles, the Corporation&rsquo;s Bylaws,
any agreement, any vote of stockholders or the Board of Directors, or otherwise.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><B>D.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Insurance. </B>The
Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or
not the Corporation would have the power to indemnify such Person against such expense, liability or loss under the MGCL.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><B>E.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Miscellaneous.
</B>The Corporation shall not be liable for any payment under this Article&nbsp;10 in connection with a claim made by any indemnitee
to the extent such indemnitee has otherwise actually received payment under any insurance policy, agreement, or otherwise, of the
amounts otherwise indemnifiable hereunder. The rights to indemnification and to the advancement of expenses conferred in Sections&nbsp;A
and B of this Article&nbsp;10 shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be
a director or officer and shall inure to the benefit of the indemnitee&rsquo;s heirs, executors and administrators.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Any repeal or modification
of this Article&nbsp;10 shall not in any way diminish any rights to indemnification or advancement of expenses of such director
or officer or the obligations of the Corporation arising hereunder with respect to events occurring, or claims made, while this
Article&nbsp;11 is in force.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><B>ARTICLE&nbsp;11. Limitation
of Liability. </B>An officer or director of the Corporation, as such, shall not be liable to the Corporation or its stockholders
for money damages, except (A)&nbsp;to the extent that it is proved that the Person actually received an improper benefit or profit
in money, property or services for the amount of the benefit or profit in money, property or services actually received; (B) to
the extent that a judgment or other final adjudication adverse to the Person is entered in a proceeding based on a finding in the
proceeding that the Person&rsquo;s action, or failure to act, was the result of active and deliberate dishonesty and was material
to the cause of action adjudicated in the proceeding; or (C)&nbsp;to the extent otherwise provided by the MGCL. If the MGCL is
amended to further eliminate or limit the Personal liability of officers and directors, then the liability of officers and directors
of the Corporation shall be eliminated or limited to the fullest extent permitted by the MGCL, as so amended.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; background-color: white">We have also obtained
officers' and directors' liability insurance which insures against liabilities that officers and directors may, in such capacities,
incur. Section&nbsp;2-418 of the MGCL provides that a Maryland corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee, or agent of the Company, or who, while a director, officer, employee, or agent
of the Company, is or was serving at the request of the Company as a director, officer, partner, trustee, employee, or agent of
another foreign or domestic corporation, partnership, joint venture, trust, other enterprise, or employee benefit plan against
any liability</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; background-color: white">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; background-color: white">asserted against and incurred by such person
in any such capacity or arising out of such person's position, whether or not the Company would have the power to indemnify against
liability under the provisions of the section.<FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; background-color: white">Reference is made
to the form of underwriting agreement to be filed as Exhibit&nbsp;1.1 hereto for provisions providing that the underwriter is
obligated under certain circumstances to indemnify our directors, officers and controlling persons against certain liabilities
under the Securities Act of 1933, as amended (the &quot;Securities Act&quot;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1in; text-align: left"><B>Item 15.</B></TD><TD STYLE="text-align: justify"><B>Recent Sales of Unregistered Securities</B></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The following sets forth
information regarding unregistered securities that were sold by the Company within the past three years.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">(1)</TD><TD STYLE="text-align: justify">In the past three years, we have granted 791,095 stock options pursuant to our 2007 Stock Option
Plan and our 2011 Stock Compensation Plan to our employees and directors. No underwriter or placement agent was involved in the
issuance or sale of any of these securities, and no underwriting discounts or commissions were paid. The issuance and sale of the
securities described above were made in reliance upon exemptions from registration requirements under Section 4(a)(2) of the Securities
Act and pursuant to Rule 701 promulgated under the Securities Act <FONT STYLE="font-family: Times New Roman, Times, Serif; background-color: white">as
a transaction by an issuer not involving any public offering </FONT><FONT STYLE="background-color: white">and pursuant to benefit
plans and contracts relating to compensation</FONT>.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">(2)</TD><TD STYLE="text-align: justify">Between November 2013 and June 2014, we issued an aggregate of 203,352 shares of common stock to
accredited investors, at a price of $12.50, for aggregate consideration of approximately $2.5 million. No underwriter or placement
agent was involved in the issuance or sale of any of these securities, and no underwriting discounts or commissions were paid.
<FONT STYLE="font-family: Times New Roman, Times, Serif; background-color: white">The securities were issued under an exemption
from registration pursuant to Section&nbsp;4(a)(2) of the Securities Act and Rule&nbsp;506 of Regulation&nbsp;D promulgated thereunder
as a transaction by an issuer not involving any public offering.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(3)</FONT></TD><TD STYLE="text-align: justify">Between December 2014 and September 2015, we issued an aggregate of 1,221,075 shares of common
stock to accredited investors, at a price of $12.50, for aggregate consideration of approximately $15.2 million. Additionally,
o<FONT STYLE="font-family: Times New Roman, Times, Serif; background-color: white">n December 23, 2014, we issued 157,985 shares
of Series B Non</FONT>-Voting Preferred Stock <FONT STYLE="font-family: Times New Roman, Times, Serif; background-color: white">to
</FONT>CJA Private Equity Financial Restructuring Master Fund I, LP<FONT STYLE="font-family: Times New Roman, Times, Serif; background-color: white">
at a price of $12.50</FONT> <FONT STYLE="font-family: Times New Roman, Times, Serif; background-color: white">per share, for aggregate
consideration of $2.0 million in a private placement transaction. The placement agent for these transactions was Sandler O'Neill&nbsp;&amp;
Partners,&nbsp;L.P.</FONT>&nbsp;<FONT STYLE="font-family: Times New Roman, Times, Serif; background-color: white">The aggregate
placement agent commission for these transactions was $611,000</FONT>. <FONT STYLE="font-family: Times New Roman, Times, Serif; background-color: white">The
securities were issued under an exemption from registration pursuant to Section&nbsp;4(a)(2) of the Securities Act and Rule&nbsp;506
of Regulation&nbsp;D promulgated thereunder as a transaction by an issuer not involving any public offering.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.75in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif">(4)</FONT></TD><TD STYLE="text-align: justify">In June 2016, we issued 91,000 shares of common stock to CJA Private Equity Financial Restructuring
Master Fund I, LP in exchange for 91,000 shares of <FONT STYLE="font-family: Times New Roman, Times, Serif; background-color: white">Series
B Non</FONT>-Voting Preferred Stock. No underwriter or placement agent was involved in the issuance of these securities, and no
underwriting discounts or commissions were paid. <FONT STYLE="font-family: Times New Roman, Times, Serif; background-color: white">The
securities were issued under an exemption from registration pursuant to Section&nbsp;4(a)(2) of the Securities Act as a transaction
by an issuer not involving any public offering.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 1in; text-align: left"><B>Item 16.</B></TD><TD STYLE="text-align: justify"><B>Exhibits and Financial Statement Schedules:</B></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The exhibits and financial
statement schedules filed as part of this registration statement are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><B>(a)</B></TD><TD STYLE="text-align: justify"><B>List of Exhibits</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <TD STYLE="width: 0.9in; border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"><B>Exhibit No.</B></FONT></td>
    <TD STYLE="width: 0.1in; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></td>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: center"><FONT STYLE="font-size: 8pt"><B>Description</B></FONT></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">1.1</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Form of Underwriting Agreement*</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">3.1</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Articles of Incorporation of Esquire Financial Holdings, Inc.</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">3.2</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Articles Supplementary of Series B Non-Voting Preferred Stock of Esquire Financial Holdings, Inc.</font></td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>


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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <TD STYLE="width: 0.9in; text-align: left"><font style="font-size: 10pt">3.3</font></td>
    <TD STYLE="width: 0.1in; text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Bylaws of Esquire Financial Holdings, Inc.</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">4.1</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Form of Common Stock Certificate of Esquire Financial Holdings, Inc.</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">4.2</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Form of Series B Preferred Stock Certificate of Esquire Financial Holdings, Inc.</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">5</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Form of opinion of Luse
    Gorman, PC regarding legality of securities being registered</FONT></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">10.1</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Letter Agreement regarding Investor Rights, dated December 23, 2014, between Esquire Financial Holdings, Inc. and CJA Private Equity Financial Restructuring Master Fund I, LP</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">10.2</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Registration Rights Agreement, dated December 23, 2014, between Esquire Financial Holdings, Inc. and CJA Private Equity Financial Restructuring Master Fund I, LP</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">10.3</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Employment Agreement by and among Esquire Financial Holdings, Inc., Esquire Bank and Dennis Shields</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">10.4</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Employment Agreement by and among Esquire Financial Holdings, Inc., Esquire Bank and Andrew C. Sagliocca</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">10.5</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Employment Agreement by and among Esquire Financial Holdings, Inc., Esquire Bank and Eric Bader</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">10.6</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Employment Agreement by and among Esquire Financial Holdings, Inc., Esquire Bank and Ari Kornhaber</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">10.7</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Esquire Bank 2007 Stock Option Plan</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">10.8</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Esquire Financial Holdings, Inc. 2011 Stock Compensation Plan, as amended</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">21</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Subsidiaries of Esquire Financial Holdings, Inc.</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">23.1</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Consent of Crowe Horwath LLP</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">23.2</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Consent of Luse Gorman, PC (set forth in Exhibit 5)</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">24.1</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Power of Attorney (set forth on the signature page to this Registration Statement)</font></td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in; text-align: left">*</TD><TD STYLE="text-align: justify">To be filed by amendment.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in; text-align: left"><B>(b)</B></TD><TD STYLE="text-align: justify"><B>Financial Statement Schedules</B></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: left; text-indent: -36.3pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">No financial statement
schedules are filed because the required information is not applicable or is included in the consolidated financial statements
or related notes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 1in; text-align: left"><B>Item 17.</B></TD><TD STYLE="text-align: justify"><B>Undertakings</B></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The undersigned registrant
hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreement certificates in such denominations
and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant
pursuant to the indemnification provisions described herein, or otherwise, the registrant has been advised that in the opinion
of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issue.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The undersigned registrant
hereby undertakes that:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">(1) For purposes of determining
any liability under the Securities Act, the information omitted from the form of prospectus as filed as part of this registration
statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4)&nbsp;or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared
effective.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">(2) For the purpose of
determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial&nbsp;bona fide&nbsp;offering thereof.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in">&nbsp;</P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>SIGNATURES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in">Pursuant to the requirements
of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized in the City of Garden City, State of New York on May 31, 2017.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 3.5in; text-align: justify; text-indent: -3.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</td>
    <td colspan="2" style="text-align: justify"><font style="font-size: 10pt; text-transform: uppercase"><b>ESQUIRE FINANCIAL HOLDINGS, INC.</b></font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="width: 50%; text-align: justify">&nbsp;</td>
    <TD STYLE="width: 4%; text-align: justify">&nbsp;</td>
    <TD STYLE="width: 46%; text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify"><font style="font-size: 10pt">By:</font></td>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: justify"><font style="font-size: 10pt">/s/ Andrew C. Sagliocca</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify"><font style="font-size: 10pt">Andrew C. Sagliocca</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify"><font style="font-size: 10pt">President and Chief Executive Officer </font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify"><font style="font-size: 10pt">(Duly Authorized Representative)</font></td></tr>
</table>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>POWER OF ATTORNEY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in">We, the undersigned directors
of Esquire Financial Holdings, Inc. (the &ldquo;Company&rdquo;), severally constitute and appoint Andrew C. Sagliocca and Eric
S. Bader with full power of substitution, our true and lawful attorney and agent, to do any and all things and acts in our names
in the capacities indicated below which said Andrew C. Sagliocca and Eric S. Bader may deem necessary or advisable to enable the
Company to comply with the Securities Act of 1933, and any rules, regulations and requirements of the Securities and Exchange Commission,
in connection with the registration statement on Form S-1 relating to the offering of the Company common stock, including specifically,
but not limited to, power and authority to sign for us or any of us in our names in the capacities indicated below the registration
statement and any and all amendments (including post-effective amendments) thereto; and we hereby approve, ratify and confirm all
that said Andrew C. Sagliocca and Eric S. Bader shall do or cause to be done by virtue hereof.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left; text-indent: 0.5in">Pursuant to the requirements
of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the
dates indicated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <TD STYLE="width: 30%; border-bottom: Black 1pt solid; text-align: center"><FONT STYLE="font-size: 8pt"><B>Signatures</B></FONT></td>
    <TD STYLE="width: 2%; text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></td>
    <TD STYLE="width: 36%; border-bottom: Black 1pt solid; text-align: center"><FONT STYLE="font-size: 8pt"><B>Title</B></FONT></td>
    <TD STYLE="width: 2%; text-align: justify"><FONT STYLE="font-size: 8pt"><B>&nbsp;</B></FONT></td>
    <TD STYLE="width: 30%; border-bottom: Black 1pt solid; font-weight: normal; text-align: center"><FONT STYLE="font-size: 8pt"><B>Date</B></FONT></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 10pt">/s/ Andrew C. Sagliocca</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify"><font style="font-size: 10pt">President and Chief Executive Officer</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">May 31, 2017</FONT></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left">Andrew C. Sagliocca</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">and Director (Principal Executive Officer)</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 10pt">/s/ Eric S. Bader</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Executive Vice President, Chief Financial </font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">May 31, 2017</FONT></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Eric S. Bader</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Officer and Treasurer (Principal Financial </font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify"><font style="font-size: 10pt">and Accounting Officer)</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 10pt">/s/ Dennis Shields</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify"><font style="font-size: 10pt">Executive Chairman</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">May 31, 2017</FONT></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Dennis Shields</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 10pt">/s/ Anthony Coelho</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify"><font style="font-size: 10pt">Director</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">May 31, 2017</FONT></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Anthony Coelho</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 10pt">/s/ Todd Deutsch</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify"><font style="font-size: 10pt">Director</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">May 31, 2017</FONT></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Todd Deutsch</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 10pt">/s/ Marc D. Grossman</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify"><font style="font-size: 10pt">Director</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">May 31, 2017</FONT></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Marc D. Grossman</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center">&nbsp;</td></tr>
</table>
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<tr style="vertical-align: top">
    <TD STYLE="width: 30%; border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 10pt">/s/ Russ M. Herman</font></td>
    <TD STYLE="width: 2%; text-align: justify">&nbsp;</td>
    <TD STYLE="width: 36%; padding-left: 1.5in; text-align: justify; text-indent: -1.5in"><font style="font-size: 10pt">Director</font></td>
    <TD STYLE="width: 2%; text-align: justify">&nbsp;</td>
    <TD STYLE="width: 30%; text-align: center"><FONT STYLE="font-size: 10pt">May 31, 2017</FONT></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="padding-left: 1.5in; text-align: left; text-indent: -1.5in"><font style="font-size: 10pt">Russ M. Herman</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="padding-left: 1.5in; text-align: justify; text-indent: -1.5in">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="padding-left: 1.5in; text-align: justify; text-indent: -1.5in">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 10pt">/s/ Janet Hill</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify"><font style="font-size: 10pt">Director</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">May 31, 2017</FONT></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Janet Hill</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 10pt">/s/ Robert J. Mitzman</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="padding-left: 1.5in; text-align: justify; text-indent: -1.5in"><font style="font-size: 10pt">Director</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">May 31, 2017</FONT></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="padding-left: 1.5in; text-align: left; text-indent: -1.5in"><font style="font-size: 10pt">Robert J. Mitzman</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="padding-left: 1.5in; text-align: justify; text-indent: -1.5in">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="padding-left: 1.5in; text-align: justify; text-indent: -1.5in">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 10pt">/s/ John Morgan</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify"><font style="font-size: 10pt">Director</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">May 31, 2017</FONT></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">John Morgan</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 10pt">/s/ Richard T. Powers</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="padding-left: 1.5in; text-align: justify; text-indent: -1.5in"><font style="font-size: 10pt">Director</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">May 31, 2017</FONT></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="padding-left: 1.5in; text-align: left; text-indent: -1.5in"><font style="font-size: 10pt">Richard T. Powers</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="padding-left: 1.5in; text-align: justify; text-indent: -1.5in">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="padding-left: 1.5in; text-align: justify; text-indent: -1.5in">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 10pt">/s/ Jack Thompson</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="padding-left: 1.5in; text-align: justify; text-indent: -1.5in"><font style="font-size: 10pt">Director</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">May 31, 2017</FONT></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Jack Thompson</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="padding-left: 1.5in; text-align: justify; text-indent: -1.5in">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="padding-left: 1.5in; text-align: justify; text-indent: -1.5in">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 10pt">/s/ Kevin C. Waterhouse</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify"><font style="font-size: 10pt">Director</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">May 31, 2017</FONT></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Kevin C. Waterhouse</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 10pt">/s/ Selig Zises</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="padding-left: 1.5in; text-align: justify; text-indent: -1.5in"><font style="font-size: 10pt">Director</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">May 31, 2017</FONT></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="padding-left: 1.5in; text-align: left; text-indent: -1.5in"><font style="font-size: 10pt">Selig Zises</font></td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="padding-left: 1.5in; text-align: justify; text-indent: -1.5in">&nbsp;</td>
    <TD STYLE="text-align: justify">&nbsp;</td>
    <TD STYLE="text-align: center">&nbsp;</td></tr>
</table>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>EXHIBIT INDEX</B></P>

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    <TD STYLE="width: 0.9in; border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt"><B>Exhibit No.</B></FONT></td>
    <TD STYLE="width: 0.1in; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></td>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: center"><FONT STYLE="font-size: 8pt"><B>Description</B></FONT></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">1.1</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Form of Underwriting Agreement*</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">3.1</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Articles of Incorporation of Esquire Financial Holdings, Inc.</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">3.2</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Articles Supplementary of Series B Non-Voting Preferred Stock of Esquire Financial Holdings, Inc.</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">3.3</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Bylaws of Esquire Financial Holdings, Inc.</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">4.1</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Form of Common Stock Certificate of Esquire Financial Holdings, Inc.</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">4.2</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Form of Series B Preferred Stock Certificate of Esquire Financial Holdings, Inc.</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">5</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Form of o</FONT><FONT STYLE="font-size: 10pt">pinion of
    Luse     Gorman, PC regarding legality of securities being registered</FONT></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">10.1</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Letter Agreement regarding Investor Rights, dated December 23, 2014, between Esquire Financial Holdings, Inc. and CJA Private Equity Financial Restructuring Master Fund I, LP</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">10.2</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Registration Rights Agreement, dated December 23, 2014, between Esquire Financial Holdings, Inc. and CJA Private Equity Financial Restructuring Master Fund I, LP</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">10.3</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Employment Agreement by and among Esquire Financial Holdings, Inc., Esquire Bank and Dennis Shields</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">10.4</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Employment Agreement by and among Esquire Financial Holdings, Inc., Esquire Bank and Andrew C. Sagliocca</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">10.5</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Employment Agreement by and among Esquire Financial Holdings, Inc., Esquire Bank and Eric Bader</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">10.6</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Employment Agreement by and among Esquire Financial Holdings, Inc., Esquire Bank and Ari Kornhaber</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">10.7</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Esquire Bank 2007 Stock Option Plan</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">10.8</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Esquire Financial Holdings, Inc. 2011 Stock Compensation Plan, as amended</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">21</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Subsidiaries of Esquire Financial Holdings, Inc.</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">23.1</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Consent of Crowe Horwath LLP</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">23.2</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Consent of Luse Gorman, PC (set forth in Exhibit 5)</font></td></tr>
<tr style="vertical-align: top">
    <TD STYLE="text-align: left"><font style="font-size: 10pt">24.1</font></td>
    <TD STYLE="text-align: left">&nbsp;</td>
    <TD STYLE="text-align: left"><font style="font-size: 10pt">Power of Attorney (set forth on the signature page to this Registration Statement)</font></td></tr>
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{"company-data": {"conformed-name": "Esquire Financial Holdings, Inc.", "cik": "0001531031", "assigned-sic": "6029", "irs-number": "000000000", "state-of-incorporation": "MD", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-218372", "film-number": "17881327"}, "business-address": {"street1": "320 OLD COUNTRY ROAD", "street2": "SUITE 101", "city": "GARDEN CITY", "state": "NY", "zip": "11530", "phone": "(516) 535-2002"}, "mail-address": {"street1": "320 OLD COUNTRY ROAD", "street2": "SUITE 101", "city": "GARDEN CITY", "state": "NY", "zip": "11530"}}
As filed with
the Securities and Exchange Commission on May 31, 2017
Registration
No. 333-_____
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM S-1
REGISTRATION
STATEMENT UNDER THE
SECURITIES
ACT OF 1933
ESQUIRE FINANCIAL
HOLDINGS, INC.
(Exact Name of
Registrant as Specified in Its Charter)
Maryland
6712
27-5107901
(State or other jurisdiction of
(Primary Standard Industrial
(I.R.S. Employer
incorporation or organization)
Classification Code Number)
Identification Number)
100 Jericho
Quadrangle, Suite 100
Jericho, New
York 11753
(516) 535-2002
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices)
Andrew C. Sagliocca
President and
Chief Executive Officer
100 Jericho
Quadrangle, Suite 100
Jericho, New
York 11753
(516) 535-2002
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)
Copies to:
John
        J. Gorman, Esq.
Gary
        A. Lax, Esq.
Luse
        Gorman, PC
5335
        Wisconsin Avenue, N.W., Suite 780
Washington,
        D.C. 20015
(202)
        274-2000
Craig
        D. Miller, Esq.
Katherine
        J. Blair, Esq.
Manatt,
        Phelps & Phillips, LLP.
One
        Embarcadero Center, 30th Floor
San
        Francisco, CA 94111
(415)
        291-7400
Approximate date of commencement of proposed
sale to the public:
As soon as practicable after this registration statement becomes effective.
If any of the securities being registered on this
Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following
box:
¨
If this Form is filed to register additional shares
for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering:
¨
If this Form is a post-effective amendment filed
pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number
of the earlier effective registration statement for the same offering:
¨
If this Form is a post-effective amendment filed
pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number
of the earlier effective registration statement for the same offering:
¨
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company.
See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company"
and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
¨
Accelerated filer
¨
Non-accelerated filer
¨
Smaller reporting company
x
(Do not check if a smaller reporting company)
Emerging growth company
x
If an emerging growth company, indicate by
check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided to Section 7(a)(2)(B) of the Securities Act.
¨
CALCULATION OF REGISTRATION FEE
Title
    of each class of securities to be registered
Proposed
    maximum
aggregate offering
price
(1)(2)
Amount
    of
registration fee
Common Stock, $0.01 par value per share
$
40,250,000
$
4,665
(1)
Estimated solely for purposes of calculating the amount of the registration fee in accordance with
Rule 457(o) of the Securities Act of 1933, as amended.
(2)
Includes the aggregate offering price of additional shares that the underwriter has the option to
purchase.
The registrant hereby amends this registration
statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment
which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange
Commission, acting pursuant to said Section 8(a), may determine.
The information in this
preliminary prospectus is not complete and may be changed. We and the selling stockholders may not sell these securities until
the Registration Statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an
offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
SUBJECT
TO COMPLETION, DATED MAY 31, 2017
PRELIMINARY PROSPECTUS
[
·
]
Shares
COMMON STOCK
This is the initial public
offering of Esquire Financial Holdings, Inc.,
the holding company for Esquire Bank, National
Association, a national banking association headquartered in
Jericho, New York
.
We are offering [
·
]
shares of common stock and the selling stockholders are offering [
·
] shares of
our common stock. We will not receive any proceeds from the sales of shares by the selling stockholders.
Prior to this offering,
there has been no established public market for our common stock. We intend to apply to list our common stock on the NASDAQ Capital
Market under the symbol "ESQ."
We anticipate that the
public offering price of our common stock will be between $[
·
] and $[
·
]
per share.
We
are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012 and, as such, have elected
to comply with certain reduced public company disclosure standards.
Investing in our common
stock involves risk. See "Risk Factors" beginning on page 12 of this prospectus to read about factors you should
consider before investing in our common stock.
Per
    Share
Total
Public offering price
Underwriting discounts(1)
Proceeds to us, before expenses
Proceeds to the selling stockholders, before expenses
(1)
See "Underwriting" for a description of all underwriting
compensation payable and expense reimbursement in connection with this offering.
The
underwriter has an option to purchase up to an additional
[
·
]
shares from us at the public offering price, less the underwriting discount, within 30 days from the date of this prospectus.
Neither the Securities
and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The shares of our common
stock in this offering are not savings accounts, deposits or other obligations of any bank and are not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other governmental agency.
The
underwriter expects to deliver the shares of our common stock against payment on or about [•], 2017.
The date of this prospectus is [
·
],
2017.
TABLE OF CONTENTS
SUMMARY
1
RISK FACTORS
12
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
32
USE OF PROCEEDS
35
CAPITALIZATION
36
DILUTION
37
DIVIDEND POLICY
39
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
40
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
43
BUSINESS
69
SUPERVISION AND REGULATION
84
MANAGEMENT
94
EXECUTIVE COMPENSATION
101
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
108
PRINCIPAL AND SELLING STOCKHOLDERS
109
DESCRIPTION OF CAPITAL STOCK
111
SHARES ELIGIBLE FOR FUTURE SALE
115
CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES  FOR NON-U.S. HOLDERS OF COMMON STOCK
117
UNDERWRITING
120
LEGAL MATTERS
123
EXPERTS
123
WHERE YOU CAN FIND ADDITIONAL INFORMATION
123
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
F-1
About This Prospectus
You should rely only on the information contained
in this prospectus or in any free writing prospectus that we authorize to be delivered to you. We, the selling stockholders and
the underwriter have not authorized anyone to provide you with different or additional information. We, the selling stockholders
and the underwriter are not making an offer of these securities in any jurisdiction where the offer is not permitted. You should
not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this
prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.
Unless we state otherwise or the context otherwise
requires, references in this prospectus to "we," "our," "us" or "the Company" refer
to Esquire Financial Holdings, Inc., a Maryland corporation, and its subsidiary Esquire Bank, National Association, which we sometimes
refer to as "Esquire Bank," "the Bank" or "our Bank."
Market and Industry Data
Within this prospectus, we reference certain
market, industry and demographic data and other statistical information. We have obtained this data and information from various
independent, third party industry sources and publications. Nothing in the data or information used or derived from third party
sources should be construed as advice. Some data and other information are also based on our good faith estimates, which are derived
from our review of internal surveys and independent sources. We believe that these external sources and estimates are reliable,
but have not independently verified them. Statements as to our market position are based on market data currently available to
us. Although we are not aware of any misstatements regarding the economic, employment, industry and other market data presented
herein, these estimates involve inherent risks and uncertainties and are based on assumptions that are subject to change.
i
Table of Contents
Implications of Being an Emerging Growth
Company
As a company with less than $1.07 billion
in revenue during our last fiscal year, we qualify as an "emerging growth company" under the Jumpstart Our Business Startups
Act of 2012, or the JOBS Act. An emerging growth company may take advantage of reduced reporting requirements and is relieved of
certain other significant requirements that are otherwise generally applicable to public companies. As an emerging growth company:
·
we may present as few as two years of audited financial statements and two years of related management discussion and analysis
of financial condition and results of operations;
·
we are exempt from the requirement to obtain an attestation and report from our auditors on management's assessment of our
internal control over financial reporting under the Sarbanes-Oxley Act of 2002;
·
we are permitted to provide reduced disclosure regarding our executive compensation arrangements pursuant to the rules applicable
to smaller reporting companies, which means we do not have to include a compensation discussion and analysis and certain other
disclosures regarding our executive compensation
; and
·
we are not required to hold non-binding advisory votes on executive compensation or golden parachute arrangements
.
In addition to the relief described above, the
JOBS Act permits us an extended transition period for complying with new or revised accounting standards affecting public companies.
We have irrevocably determined to not take advantage of this extended transition period, which means that the financial statements
included in this prospectus, as well as any financial statements that we file in the future, will be subject to all new or revised
accounting standards generally applicable to public companies.
In this prospectus we have elected to take advantage
of the reduced disclosure requirements relating to executive compensation, and in the future we may take advantage of any or all
of these exemptions for so long as we remain an emerging growth company. We will remain an emerging growth company until the earliest
of (i) the end of the fiscal year during which we have total annual gross revenues of $1.07 billion or more, (ii) the end of the
fiscal year following the fifth anniversary of the completion of this offering, (iii) the date on which we have, during the previous
three-year period, issued more than $1.0 billion in non-convertible debt and (iv) the date on which we are deemed to be a
"large accelerated filer" under the Securities Exchange Act of 1934, as amended.
ii
Table of Contents
SUMMARY
This summary highlights
selected information contained in greater detail elsewhere in this prospectus. This summary may not contain all of the information
that you should consider before investing in our securities. You should carefully read this entire prospectus, including the sections
entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our consolidated financial statements and the notes related thereto before making an investment decision.
Some of the statements in this prospectus constitute forward-looking statements. See "Cautionary Note Regarding Forward-Looking
Statements."
Our Company
We are a bank holding company headquartered
in Jericho, New York and registered under the Bank Holding Company Act of 1956, as amended (the "BHC Act"). Through
our wholly owned bank subsidiary, Esquire Bank, National Association, we are a full service commercial bank dedicated to serving
the financial needs of the legal and small business communities on a national basis, as well as commercial and retail customers
in the New York metropolitan market. We offer tailored products and solutions to the legal community and their clients as well
as dynamic and flexible merchant services solutions to small business owners, both on a national basis. We also offer traditional
banking products for businesses and consumers in our local market area (a subset of the New York metropolitan market). We believe
these activities, primarily anchored by our legal community focus, generate a stable source of low cost core deposits and a diverse
asset base to support our overall operations. Our commercial and consumer loans tailored to the litigation market ("Attorney-Related
Loans") enhance our overall yield on our loan portfolio, enabling us to earn attractive risk-adjusted net interest margins.
Additionally, our merchant processing activities have generated a relatively stable source of fee income. We believe our unique
and dynamic business model distinguishes us from other banks and non-bank financial services companies in the markets in which
we operate as demonstrated by comparing our performance metrics for the three months ended March 31, 2017 and 2016 as well as our
year ended 2016 and 2015.
For the three months ended March 31, 2017 and
2016:
·
Our net income increased 26.8% to $815,000 or $0.16 per diluted share.
·
We had a net interest margin of 4.23%, stabilized by a low cost of
funds of 0.15% on our core deposits.
·
Our loans increased 23.0%, or $54.3 million, to $290.6 million, with
no non-performing loans and solid asset quality metrics.
·
Our noninterest income increased 22.0% to $1.2 million, which represented
21.9% of our total revenue for the three months ended March 31, 2017, primarily driven by our merchant services platform.
·
As of March 31, 2017, our total assets, loans, deposits and stockholders'
equity totaled $438.1 million, $290.6 million, $383.4 million and $53.2 million, respectively.
For the years ended December 31, 2016 and 2015:
·
Our net income increased 140.8% to $2.8 million, or $0.55 per diluted
share.
·
We had a net interest margin of 4.25%, an increase from 3.74%, stabilized
by a low cost of funds of 0.16% on our deposits.
·
Our loans increased 24.1%, or $54.1 million, to $278.6 million, with
no non-performing loans and solid asset quality metrics.
·
Our noninterest income increased 40.2% to $4.1 million, which represented
20.9% of our total revenue for the year ended December 31, 2016, primarily driven by our growing merchant services platform.
1
Table of Contents
·
As of December 31, 2016, our total assets, loans, deposits and stockholders'
equity totaled $424.8 million, $278.6 million, $370.8 million and $52.2 million, respectively.
Both 2015 and 2016 were transformational years
for the Company, due in part to the successful execution of our unique and dynamic business model. We believe our ongoing commitment
to the litigation and small business communities have been, and should continue to be, the foundation for our success. In August
2015, we closed our private placement offering of common stock and preferred stock that began in 2014, raising net proceeds totaling
$17.2 million and successfully converted Esquire Financial Holdings, Inc. and Esquire Bank from a savings and loan holding company
and savings bank to a bank holding company and national bank, respectively. We believe that the additional capital, coupled with
the conversion to a national bank, has and should continue to enhance our commercial loan growth in the legal industry and business
communities we serve.
We remain true to our commitment to serve the
litigation community and our commercial customers through our tailored and innovative products and solutions. We believe Esquire
Bank's approach to the legal community is simple yet effective
–
we
listen to the customer's needs
and tailor products and services around those needs. Our management team includes attorneys and bankers who have serviced the legal
community throughout their careers, which is a differentiating factor and key to our robust attorney network. This model continues
to set us apart from other institutions that offer a "one product fits all" model. Our relationships within the litigation
community are a key contributor to our loan growth, strong loan yields, and low cost core deposits. The litigation community represented
more than 70% of our deposit base at March 31, 2017. In addition to our lending and deposit gathering activities, we have also
remained steadfast in growing our merchant services platform. We provide dynamic and flexible merchant services solutions to small
business owners. Our merchant services platform has grown to approximately 13,000 small businesses at March 31, 2017, which generated
most of our noninterest income and represented 21.9% of our revenue for the three months ended March 31, 2017 and 20.9% of our
revenue for the year ended December 31, 2016. We believe our merchant services platform represents a significant opportunity for
future growth in fee income, core deposits and enhanced lending opportunities.
Our low cost core deposits (deposits, excluding
time deposits), representing our primary funding source for loan growth, totaled $360.7 million at March 31, 2017 resulting in
a total cost of funds of 0.15%. These stable low cost funds are driven by our attorney operating and escrow deposits, representing
more than 70% of our total deposit base at March 31, 2017. We intend to continue to prudently manage growth in deposits, utilizing
customer sweep programs for our mass tort and class action business banking programs. We do not have traditional "brick and
mortar" branches to support our deposit growth. Instead, we rely on our robust attorney network to gather deposits and our
customers utilize on-line cash management technology to manage their operating and escrow accounts as well as their business banking
needs across the country. We believe the lack of branch infrastructure coupled with our strong net interest margin and growth will
continue to drive our efficiency ratio below the 73% reported for the three months ended March 31, 2017.
With a growing and generally unseasoned loan
portfolio, our credit risk may continue to increase and our future performance could be adversely affected; however, we have invested
in and developed underwriting and credit management processes tailored to each of the products we offer in order to minimize these
risks. We are committed to continuing to invest in and develop our underwriting and credit management processes to ensure our
asset quality remains high and we minimize our credit risk. At March 31, 2017, the average age of our loan portfolio was 2.10
years and we currently do not have any non-performing loans. See "Risk Factors—Our loan portfolio is unseasoned,"
beginning on page 12.
Esquire Bank, National Association is subject
to comprehensive regulation and examination by the Office of the Comptroller of the Currency ("OCC") and Esquire Financial
Holdings, Inc. is supervised by the Board of Governors of the Federal Reserve System ("FRB").
Our Business Strategy
Esquire Bank has positioned itself as a unique
provider of financial services and products to the legal community, developing a strong brand and reputation with attorneys and
their firms. The legal community that we
2
Table of Contents
serve consists of law firms that litigate mass torts, class actions,
commercial, employment, product liability, personal injury and other litigation cases, as well as individual attorneys and their
clients (plaintiffs involved in the litigation who are the recipients of the settlements or judgments). According to the Towers
Watson 2011 Update on U.S. Tort Cost Trends, the U.S. tort system paid out $264.6 billion in commercial and personal tort costs
in 2010. The same report states that "since 1950, growth in tort costs [commercial and personal] has exceeded growth in
GDP by an average of approximately two percentage points." However, tort cost growth has generally lagged GDP growth in
the last five years covered by the Towers Watson report and the Company has not conducted any independent research to determine
if the value of tort actions in 2010 remains indicative of the value of tort actions in 2017.
Law firms are typically compensated on a contingent
basis based on a percentage of the gross settlement amounts, ranging from 20%-40% of the gross settlement. This market has traditionally
been fragmented with deposit services offered by banks and lending services offered by finance companies (non-FDIC insured entities).
Since commencing operations, we have leveraged
the strong business relationships that our founders, directors, stockholders, customers and officers have in the legal community,
and believe we have created a unique distribution network. We have had certain informal affiliations with numerous national and
state trial associations, including but not limited to the American Association of Justice (AAJ), the New York State Trial Lawyers
Association (NYSTLA), the Consumer Attorneys of California (CAOC), the Florida Association of Justice (FAJ) and the Pennsylvania
Association for Justice (PAJ). These organizations represent licensed trial attorneys across their states and nationwide. These
informal affiliations, coupled with our strong business relationships, should help to raise awareness of Esquire Bank's products
and services throughout the legal community. Our goal is to position Esquire Bank as the premier "one stop" financial
services firm for this legal community. We believe we are one of the few banks in the United States that specifically supports
and has the expertise to understand the specialized financial services needs of the legal community, and have developed commercial
and consumer loan products and services to meet these needs. We provide specialized lending and depository services to participants
in the litigation industry on a national basis, including:
·
Plaintiff law firms - single event, mass tort, class action and worker's compensation firms.
·
Non-bank trustees - claims administrators, third party administrators and lien resolution firms administering mass tort or
class action settlements on behalf of the courts, court orders, plaintiff and/or defendant counsel.
·
Consumers - claimants in single event, mass tort and class action lawsuits as well as employees and partners of the law firms.
In addition to our lending capabilities, in
2012 we entered into the merchant services business as an acquiring bank and hired a senior manager with over 35 years of experience
to lead that business. As a Visa and MasterCard member, we provide merchant services for small businesses located throughout the
United States through relationships with third parties known as Independent Service Organizations ("ISOs"). ISOs provide
a source of protection against merchant losses through contractual liability for the acts and omissions of the merchants. These
liabilities can be satisfied from ISO and/or merchant reserves and monthly residual payments due to the ISO that are maintained
at Esquire Bank. To date, Esquire Bank has not incurred any losses from its merchant services activities. We entered into the merchant
processing business to diversify and strengthen our revenue stream by increasing noninterest income and to provide cross selling
opportunities for other business banking products and services. For the three months ended March 31, 2017, merchant processing
revenues were approximately $838,000 representing most of our noninterest income, which was 21.9% of our total revenue. For the
year ended December 31, 2016, merchant processing revenues were approximately $2.9 million representing most of our noninterest
income, which was 20.9% of our total revenue. At March 31, 2017, we serviced approximately 13,000 small businesses, and for the
three months ended March 31, 2017, we processed $787.7 million in card volume. We intend to continue to expand our merchant processing
business.
Finally, we offer traditional commercial and
consumer lending and depository products in the New York metropolitan area with a focus on commercial, commercial real estate,
multifamily and 1-4 family residential loans.
3
Table of Contents
We control credit risk through both disciplined underwriting, as
well as active credit management processes and procedures. For more discussion on our lending activities, see "Business—Lending
Activities."
Our Competitive Strengths
We attribute our success to the following competitive
strengths:
Unique Distribution Network in Scalable
Industries
. We have developed a unique niche in the legal industry which represented $264.6 billion in commercial and personal
tort costs in 2010. We believe that our unique distribution network within the legal industry is derived from decades of experience
anchored by our founders, Board of Directors, stockholders, officers, customers and our affiliations with both state and national
trial associations. The legal community is our primary engine for current and future growth in low cost core deposits, commercial
loans and consumer loans. We believe the litigation industry has significant growth potential for us across the lending and depository
spectrum, as we represent a small portion of the total tort settlement market for each year that we have been in operation. While
we do face significant competition for Attorney-Related Loans, derived primarily from eight to ten nationally-oriented financial
companies that specialize in the litigation industry, we believe our relationships within the litigation community, our competitive
rates on loans and our ability to offer national, uniform deposit products, set us apart. Also, through our merchant services solutions
to small business owners, we processed approximately $3.6 billion in merchant transaction volume for the year ended December 31,
2016 and $787.7 million for the three months ended March 31, 2017. We believe we have the platform and the capacity to continue
to grow our merchant services business.
Scalable Product Platforms Positioned
for Growth
. We have invested in people, processes and procedures in order to facilitate the recent growth in our key product
lines and position such product lines for additional growth in the future. We hired experienced management to establish unique
product lines, which have only recently become profitable on a run rate basis. We believe these unique product lines have significant
remaining growth potential. We also believe that the scalable platforms created by these investments position us for substantial
growth in our key product lines and have laid the groundwork for our ability to operate as a larger financial institution.
Diversified and Stable Business Model.
The combination of our higher margin legal community focus for commercial banking (commercial loans, claimant/consumer loans and
core low cost deposits), fee-based small business focus in merchant services and our community banking focus in the New York metropolitan
area (commercial real estate and residential income producing lending) allows us to grow in varied economic conditions and business
cycles. Our merchant services platform is intended to provide a stable fee based income and a platform for small business loan
and deposit growth. Our New York metropolitan commercial real estate portfolio has historically provided a stable lending base
in our local market. Our commercial product lines enhance the overall yield of our loan portfolio and are offered on a nationwide
basis, helping us to mitigate our exposure to stagnant loan demand or yield compression in our community banking market. This model
also provides asset diversity and favorable cost of funds, especially when competing against the wholesale banks and non-bank finance
companies that offer similar commercial finance products. However, substantially all of our real estate loans and a majority of
our Attorney-Related Loans are concentrated in the New York metropolitan area and if negative economic conditions develop in the
United States as a whole or in the New York market, we could experience higher delinquencies and loan charge-offs, which would
reduce our net income and adversely affect our financial condition.
Focused Risk Mitigation Practices
.
We have developed underwriting and credit management processes tailored to each of the products we offer, allowing us to construct
a diversified asset portfolio including specialized markets not typically served by community banks. We believe that our industry
experience and product knowledge have allowed us to develop processes, procedures and structural features in connection with offering
specialized products that enable us to appropriately identify and mitigate the risks associated with these products and services.
We intend to increase our originations of commercial Attorney-Related Loans, which include working capital lines of credit, case
cost lines of credit, term loans to law firms, and post-settlement commercial and other commercial attorney-related loans ("Commercial
Attorney-Related Loans") and these loans generally have more risk than 1-4 family residential mortgage loans and commercial
loans secured by real estate. However, we are focused on continuing to invest in our risk mitigation practices and leveraging our
product knowledge to ensure we minimize these credit risks while we continue to grow our loan portfolio.
4
Table of Contents
Experienced Management Team
. Our
leadership team consists of senior managers with an average of over 20 years of experience in the banking and non-banking financial
services industries. The majority of our senior managers come from multi-billion dollar financial institutions. We believe the
experience, relationships, and entrepreneurial culture of our management team as well as our Board of Directors have been and will
continue to be key drivers of our growth. Our key leadership team includes:
·
Dennis Shields, Executive Chairman of the Board
. Mr. Shields
is the Executive Chairman of the Board of Directors and was a founding organizer of Esquire Bank. Since its inception in 2000,
Mr. Shields has also served as Chief Executive Officer of Plaintiff Funding Corp. (dba LawCash), a New York-based specialty finance
company that provides financial services products to law firms and claimants. Since 2014, Mr. Shields has served as the Chairman
at YieldStreet, an online platform for alternative investments and he is also the Chairman of Keeps America, a company that works
with law firms, disability advocates, and third-party administrators to distribute settlement awards and government benefits to
clients through its prepaid card. Mr. Shields served as a lay member of the Grievance Committee to the Second and Eleventh Judicial
Departments appointed by presiding judge from 1996 to 2004 and previously served on the New York State Health Information and Quality
Improvement Committee. Mr. Shields has authored two books and is a frequent speaker in both the legal and finance community.
·
Andrew C. Sagliocca, President, Chief Executive Officer and Director
. 
Mr. Sagliocca served as the Company's Chief Financial Officer when he joined Esquire Bank in February 2007. He became the
Chief Executive Officer in January 2009. Prior to joining Esquire Bank, Mr. Sagliocca was Senior Vice President and Corporate Controller
of North Fork Bank from 1999 to 2007. Mr. Sagliocca has more than 27 years of experience in the financial services industry.
·
Eric S. Bader, Executive Vice President, Chief Financial Officer
and Treasurer
.  Prior to his appointment as Executive Vice President in February 2011, Mr. Bader served as our Senior
Vice President, Chief Financial Officer and Treasurer since January 2009. Prior to this, Mr. Bader served as Esquire Bank's
Senior Vice President and Treasurer, since joining Esquire Bank in January 2008.  Prior to joining Esquire Bank, Mr. Bader
was Vice President at Goldman Sachs and served as a Vice President and Investment Officer at North Fork Bank.  Mr. Bader has
17 years of experience in the financial services industry.
·
Ari P. Kornhaber, Executive Vice President, Director of Sales
.
Mr. Kornhaber has served as Director of Sales of Esquire Bank since 2013. From 2004 to 2013, Mr. Kornhaber served as National Marketing
Director at Plaintiff Funding Holding. Inc. (dba LawCash). Mr. Kornhaber has spoken on the subject of financing for lawyers, law
firms and their clients, and the ethics surrounding the same, at numerous seminars and conferences across the United States for
over 10 years.  After receiving his law degree from Touro Law School in New York, Mr. Kornhaber was a practicing plaintiff's
lawyer in New York City with the law firm of Pariser and Vogelman, PC and was a trial attorney for the law firm of Napoli, Kaiser
and Bern, LLC, where he specialized in personal injury, medical malpractice and mass tort litigation.
·
Fred Horn, Senior Vice President, Director of Merchant Services
.
Mr. Horn joined Esquire Bank in 2012 to start up a merchant services program in order to generate processing fee income and
increase demand deposits.  Prior to joining Esquire Bank, Mr. Horn was Senior Vice President at Merrick Bank for 11 years
where he started and directed a merchant service program which became the sixteenth largest such program in the country. Mr. Horn
served for 25 years at Summit Bank, Princeton, New Jersey (now Bank of America), where he held a number of senior officer positions
including directing merchant services, an American Express, MasterCard and Visa credit card portfolio and a top 10 US Visa debit
card program.
Our Growth Strategy
We believe that our model of community banking
with a focus on niche commercial products and merchant services provides us with differentiated advantages when compared to our
competitors, including a strong deposit
5
Table of Contents
franchise, a more complete set of product offerings and the ability
to earn attractive risk-adjusted net interest margins. The pool of potential law firm customers is substantial, yet the specialized
lending markets that serve them remain highly fragmented. Many of our commercial loans are de novo products which we believe are
poised to capture additional market share as they mature. We will leverage our commercial law firm relationships to continue to
enhance and grow our claimant/consumer lending base, meeting the needs of the law firms' customers. We expect to continue
capturing market share in the legal community because we provide both commercial and consumer clients with unique banking products
and services. Additionally, we plan to continue growing our merchant services platform for small businesses nationally, which we
expect will increase our fee income while offering lending and depository services to these businesses. Finally, we believe the
lack of a physical branch infrastructure and our strong balance sheet allows us to make investments in technology, personnel, marketing
and systems not available to non-bank commercial lenders.
We market our loans along with other products
and services through a variety of channels. Fundamentally, we focus on a high-touch direct sales model, building long-term relationships
with our customers. Our sales officers actively solicit new and existing customers in the communities we serve. For our commercial
products, our sales personnel travel across the country to meet with our customers throughout the year. Importantly, while we seek
to ensure that the pricing on our loan products is competitive, we also attempt to distinguish ourselves on criteria other than
price, including service, industry knowledge and what we believe is a more complete value proposition than our competitors. We
believe that our suite of complementary commercial and consumer legal industry product options coupled with our on-line cash management
platform allow us to offer full-service banking relationships to customers and industries that have historically been served by
smaller non-bank commercial finance companies. It is our strategy to deepen our customer relationships and increase retention by
cross-marketing all of these products to our customers in an effort to be a "one-stop" financial services provider,
particularly in our legal industry niche.
Our Market Area
We define the market area for our legal community
products as law firms practicing within the United States, United States territories and United States commonwealths, and we serve
the litigation industry on a nationwide basis. For traditional community banking products and services, our primary market area
is the New York metropolitan area, specifically Nassau and New York (Manhattan) Counties in New York and secondarily throughout
the state of New York.
We have established our niche in the litigation
market, which, according to the Towers Watson 2011 Update on U.S. Tort Cost Trends, was an approximately $264.6 billion market
in the United States in 2010, through the strategic development of a business model that understands our market's unique needs
and provides access to our target customers.
We have designed unique, value added products and services for our current
and potential customers and created a distribution network with direct access to the market through the experience and networks
of our Board, Advisory Board, attorney stockholders and certain members of management. A number of our directors, Advisory Board
members and investors are well-known, influential market figures and active members of some of the leading litigation law firms
in the nation and national and state bar associations as well as other industry leading companies such as plaintiff financing and
structured settlement services. In addition, we have established relationships with key industry organizations such as New York
State Trial Lawyers Association, Consumer Attorneys of California, Florida Justice Association, and a number of other state trial
attorney associations. Through our current law firm clients and other relationships, we believe we have access to thousands of
trial attorneys.
Our traditional community banking market area
has a diversified economy typical of most urban population centers, with the majority of employment provided by services, wholesale/retail
trade, finance/insurance/real estate ("FIRE") and construction. Services account for the largest employment sector
across the two primary market area counties, while wholesale/retail trade accounts for the second largest employment sector in
Nassau and New York Counties. New York City is one of the premier financial centers in the world, and thus FIRE is the third largest
employment sector in New York County. As of June 30, 2016
(the latest date for which information
is available)
, New York County's $1.0 trillion deposit market was much larger than the $69.8 billion deposit market
in Nassau County.
6
Table of Contents
Risks Relating to Our Company and an Investment in Our Common
Stock
An investment in our common stock involves
substantial risks and uncertainties. Investors should carefully consider all of the information in this prospectus, including
the detailed discussion of these and other risks under "Risk Factors" beginning on page 12, prior to investing
in our common stock. Some of the more significant risks include the following:
·
We have a limited operating history and have recently experienced significant growth, which makes it difficult to forecast
our revenue and evaluate our business and future prospects;
·
Because we intend to continue to increase our commercial loans, our credit risk may increase;
·
A substantial portion of our business is dependent on the prospects of the legal industry and changes in the legal industry
may adversely affect our growth and profitability;
·
A substantial portion of our loan portfolio consists of multifamily real estate loans and commercial real estate loans, which
have a higher degree of risk than other types of loans;
·
We expect to increase our originations of consumer loans, including post-settlement consumer and structured settlement loans,
and such loans generally carry greater risk than loans secured by owner-occupied, 1-4 family real estate, and these risks will
increase as we continue to increase originations of these types of loans;
·
As a business operating in the financial services industry, our business and operations may be adversely affected in numerous
and complex ways by weak economic conditions;
·
A substantial majority of our loans and operations are in New York, and therefore our business is particularly vulnerable to
a downturn in the New York City economy;
·
We rely heavily on our management team, our board of directors and our advisory board members and our business could be adversely
affected by the unexpected loss of one or more of our officers or directors;
·
We operate in a highly competitive industry and face significant competition from other financial institutions and financial
services providers, which may decrease our growth or profits;
·
We face risks related to our operational, technological and organizational infrastructure;
·
The occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents
could have a material adverse effect on our business, financial condition and results of operations;
·
Our business, financial condition, results of operations and future prospects could be adversely affected by the highly regulated
environment and the laws and regulations that govern our operations, corporate governance, executive compensation and accounting
principles, or changes in any of them; and
·
An active, liquid trading market for our common stock may not develop, and you may not be able to sell your common stock at
or above the public offering price, or at all.
Corporate Information
Our principal executive offices are located
at 100 Jericho Quadrangle, Suite 100, Jericho, New York 11753, and our telephone number at that address is (800) 996-0213. Our
website address is www.esquirebank.com. The information contained on our website is not a part of, or incorporated by reference
into, this prospectus.
7
Table of Contents
The Offering
Common stock offered by us
[
·
] shares
Common stock offered by the selling stockholders
[
·
] shares
Underwriter's purchase option
[
·
] shares from us
Common stock outstanding after completion of this offering
[
·
] shares (or [
·
] shares if the underwriter exercises its purchase option in full). There are 66,985 shares of our Series B Non-Voting Preferred Stock (the "Series B Preferred Stock") that will remain outstanding following completion of the offering.  The Series B Preferred Stock is not convertible by the holder but is automatically convertible on a one for one basis into shares of our common stock under certain circumstances. For more information on the Series B Preferred Stock, please see "Description of Capital Stock."
Use of proceeds
We estimate that the net proceeds to us from this offering, after deducting underwriting discounts and estimated offering expenses, will be approximately $[
·
] million (or approximately $[
·
] million if the underwriter exercises its option to purchase additional shares in full), based on an assumed public offering price of $[
·
] per share, which is the midpoint of the price range set forth on the cover of this prospectus. We intend to use the net proceeds that we receive from this offering to support the growth in Esquire Bank's loan portfolio, including the possibility of making larger loans due to the increased lending limits, to finance potential strategic acquisitions to the extent such opportunities arise and for other general corporate purposes, which could include other growth initiatives. We will not receive any proceeds from the sale of shares of our common stock by the selling stockholders. See "Use of Proceeds."
Dividend policy
We have not historically declared or paid any cash dividends on our common stock. We currently intend to retain all of our future earnings, if any, for use in our business and do not anticipate paying any cash dividends on our common stock in the foreseeable future. Any future determination to pay cash dividends on our common stock will be made by our board of directors and will depend upon our results of operations, financial condition, capital requirements, regulatory and contractual restrictions, our business strategy and other factors that our board of directors deems relevant. See "Dividend Policy."
Listing and trading symbol
We intend to apply to list our common stock on the NASDAQ Capital Market under the symbol "ESQ."
8
Table of Contents
Risk factors
See "Risk Factors" for a discussion of factors you should carefully consider before deciding to invest in our common stock.
Unless otherwise indicated, all information
in this prospectus relating to the number of shares of common stock to be outstanding immediately after the completion of this
offering is based on 5,003,030 shares outstanding as of March 31, 2017 and:
·
assumes no exercise of the underwriter's option to purchase up to [
·
]
additional shares of common stock from us;
·
excludes 1,013,045 shares of common stock issuable upon the exercise of outstanding stock options at a weighted average exercise
price of $12.14 per share (333,315 shares of which are currently exercisable) as of March 31, 2017;
·
excludes 11,562 shares of our common stock reserved for issuance in
connection with restricted stock awards, restricted stock unit awards, and stock options available for issuance under our 2007
Stock Option Plan and our 2011 Stock Compensation Plan as of March 31, 2017; and
·
excludes 66,985 shares of our Series B Preferred Stock that were issued
in December 2014 that are not convertible by the holder, but are convertible on a one for one basis into shares of our common stock
under certain circumstances.
9
Table of Contents
Summary Historical Consolidated Financial
Data
The following table sets forth
summary historical consolidated financial data as of the dates and for the periods shown. The summary balance sheet data as
of December 31, 2016 and 2015 and the summary income statement data for the years then ended have been derived from our
audited consolidated financial statements included elsewhere in this prospectus. The summary balance sheet data as of
December 31, 2014 and the summary income statement data for the year then ended have been derived from our audited
consolidated financial statements that are not included in this prospectus. The summary consolidated financial data as of
March 31, 2017 and for the three months ended March 31, 2017 and 2016 is derived from our unaudited interim condensed
consolidated financial statements included elsewhere in this prospectus and includes all normal and recurring adjustments
that we consider necessary for a fair presentation. The summary consolidated balance sheet data as of March 31, 2016 is
derived from our unaudited interim condensed consolidated financial statements that are not included in this prospectus and
have not been subject to review procedures from our independent accountants. Operating results for the three months ended
March 31, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. The
information should be read in conjunction with "Selected Historical Consolidated Financial Data," "Risk
Factors," "Management Discussion and Analysis of Financial Condition and Results of Operations" and our
consolidated financial statements and the related notes included elsewhere in this prospectus.
At or For the Three Months
Ended March 31,
At or For the Years Ended December 31,
2017
2016
2016
2015
2014
(Dollars in thousands, except share and per share data)
Balance Sheet Data:
Total assets
$
438,059
$
351,500
$
424,833
$
352,650
$
330,690
Cash and cash equivalents
32,586
25,069
42,993
33,154
71,891
Securities available-for-sale
103,652
79,200
92,645
84,239
70,925
Loans receivable, net
287,033
233,294
275,165
221,720
170,512
Restricted stock
1,746
1,487
1,649
1,430
237
Deposits
383,372
298,693
370,788
301,687
290,774
Secured borrowings
284
378
371
381
391
Total stockholders' equity
53,244
51,170
52,186
49,425
38,542
Income Statement Data:
Interest income
$
4,432
$
3,733
$
16,168
$
12,451
$
10,714
Interest expense
137
101
511
457
466
Net interest income
4,295
3,632
15,657
11,994
10,248
Provision for loan losses
150
145
595
930
300
Net interest income after provision for loan losses
4,145
3,487
15,062
11,064
9,948
Noninterest income
1,204
987
4,125
2,943
1,765
Noninterest expense
4,024
3,420
14,599
12,171
11,262
Income before income tax expense
1,325
1,054
4,588
1,836
451
Income tax expense
510
411
1,766
664
410
Net income
815
643
2,822
1,172
41
Less: Preferred stock dividends
—
—
—
—
—
Net income available to common stockholders
$
815
$
643
$
2,822
$
1,172
$
41
Per Share Data:
Earnings per common share:
Basic
$
0.16
$
0.13
$
0.56
$
0.25
$
0.01
Diluted
$
0.16
$
0.13
$
0.55
$
0.25
$
0.01
Book value per common share(1)
$
10.50
$
10.07
$
10.29
$
9.72
$
8.98
Tangible book value per common share(2)
$
10.50
$
10.07
$
10.29
$
9.72
$
8.98
Selected Performance Ratios:
Return on average assets
0.79
%
0.74
%
0.74
%
0.36
%
0.01
%
Net interest margin
4.23
%
4.27
%
4.25
%
3.74
%
3.86
%
Efficiency ratio, adjusted(3)
73.18
%
74.14
%
73.82
%
81.48
%
94.94
%
Allowance for loan losses to total loans
1.21
%
1.26
%
1.23
%
1.25
%
1.25
%
Nonperforming loans to total loans(4)
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
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(1)
For purposes of computing book value per common share, book value equals total common stockholders' equity. Total common
stockholders' equity equals total stockholders' equity, less preferred equity. Preferred equity was $720 and $1,697
at March 31, 2017 and 2016, respectively, and $720, $1,697 and $1,842 at December 31, 2016, 2015 and 2014, respectively.
(2)
The Company had no intangible assets as of the dates indicated. Thus, tangible book value per common share is the same as book
value per common share for each of the periods indicated.
(3)
Efficiency ratio represents noninterest expenses, divided by the sum of net interest income plus noninterest income. With respect
to efficiency ratio, adjusted, noninterest income excludes gains or losses on sale of investment securities. This is a non-GAAP
financial measure. See "Non-GAAP Financial Measure Reconciliation" below for a reconciliation of this measure to its
most comparable GAAP measure.
(4)
Nonperforming loans include nonaccrual loans, loans past due 90 days and still accruing interest and loans modified under troubled
debt restructurings.
Non-GAAP Financial Measure Reconciliation
The efficiency ratio is a non-GAAP measure
of expense control relative to adjusted revenue. We calculate the efficiency ratio by dividing total noninterest expenses, as determined
under GAAP, by the sum of total net interest income and total noninterest income, each as determined under GAAP, but excluding
net gains on securities and other non-recurring income sources, if applicable, from this calculation, which we refer to below as
adjusted revenue. We believe that this provides one reasonable measure of core expenses relative to core revenue.
We believe that this non-GAAP financial measure
provides information that is important to investors and that is useful in understanding our financial position, results and ratios.
However, this non-GAAP financial measure is supplemental and is not a substitute for an analysis based on GAAP measures. As other
companies may use different calculations for this measure, this presentation may not be comparable to other similarly titled measures
by other companies.
At March 31,
At December 31,
2017
2016
2016
2015
2014
(Dollars in thousands)
Efficiency Ratio:
Net interest income
$
4,295
$
3,632
$
15,657
$
11,994
$
10,247
Noninterest income
1,204
987
4,125
2,943
1,766
Less: Net gains on sales of securities
—
6
6
—
151
Adjusted revenue
$
5,499
$
4,625
$
19,776
$
14,937
$
11,862
Total noninterest expense
4,024
3,420
14,599
12,171
11,262
Efficiency ratio
73.18
%
74.14
%
73.82
%
81.48
%
94.94
%
11
Table of Contents
RISK FACTORS
Investing in our common stock involves a
high degree of risk. Before you decide to invest in our common stock, you should carefully consider the risks described below,
together with all other information included in this prospectus, including our consolidated financial statements and the related
notes included elsewhere in this prospectus. We believe the events described below are the risks that are material to us as of
the date of this prospectus. If any of the following risks actually occurs, our business, prospects, financial condition, results
of operations and cash flow could be materially and adversely affected. In such an event, the value of our common stock could decline
and you could lose all or part of your investment. This prospectus also contains forward-looking statements, estimates
and projections that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the
forward-looking statements, estimates and projections as a result of specific factors, including the risk factors described below.
Risks Related to Our Business
We have a limited operating history
and have recently experienced significant growth, which makes it difficult to forecast our revenue and evaluate our business and
future prospects.
We have only been in
existence since 2006, and in 2015, 2016 and during the three months ended March 31, 2017, we experienced significant growth following
a capital raise and the conversion from a savings and loan holding company with a savings bank subsidiary to a bank holding company
with a national bank subsidiary. As a result of our limited operating history and recent accelerated growth, in particular in our
merchant services business, our ability to forecast our future results of operations and plan for and model future growth is limited
and subject to a number of uncertainties. We have encountered and will continue to encounter risks and uncertainties frequently
experienced by growing companies in the financial services industry, such as the risks and uncertainties described herein. Accordingly,
we may be unable to prepare accurate internal financial forecasts and our results of operations in future reporting periods may
be below the expectations of investors. If we do not address these risks successfully, our results of operations could differ materially
from our estimates and forecasts or the expectations of our stockholders, causing our business to suffer and our stock price to
decline.
Because we intend to continue to increase
our commercial loans, our credit risk may increase.
At March 31, 2017,
our commercial loans totaled $112.8 million, or 39.0% of our total loans, including $101.2 million of Commercial Attorney-Related
Loans, which represented 89.7% of our commercial loans. We intend to increase our originations of commercial loans, including our
Commercial Attorney-Related Loans, which consist of working capital lines of credit, case cost lines of credit, term loans to law
firms, and post-settlement commercial and other commercial attorney-related loans. These loans generally have more risk than 1-4
family residential mortgage loans and commercial loans secured by real estate. Since repayment of commercial loans, including our
Commercial Attorney-Related Loans, depends on the successful receipt of settlement proceeds or the successful management and operation
of the borrower's businesses, repayment of such loans can be affected by adverse court decisions and adverse conditions in
the local and national economy. Commercial Attorney-Related Loans present unique credit risks in that attorney or law firm revenues
can be volatile depending on the number of cases, the timing of court decisions and the timing of the overall judicial process.
In our experience, an average case can take two to four years to litigate. Determining the value of an attorney's or law
firm's case inventory (borrowing base) is also inherently an imprecise exercise. Though repayment of case lines is not dependent
on a favorable case settlement, unfavorable outcomes can ultimately impact the cash flows of the borrower. An adverse development
with respect to one loan or one credit relationship can expose us to significantly greater risk of loss compared to an adverse
development with respect to a 1-4 family residential mortgage loan or a commercial real estate loan.
Because we plan to
continue to increase our originations of these loans, commercial loans generally have a larger average size as compared with other
loans such as residential loans, and the collateral for commercial loans is generally less readily-marketable, losses incurred
on a small number of commercial loans could have a disproportionate and material adverse impact on our financial condition and
results of operations.
12
Table of Contents
A substantial portion of our business is dependent on the prospects
of the legal industry and changes in the legal industry may adversely affect our growth and profitability.
We depend on our relationships within the legal
community and our products and services tailored to the legal industry account for a significant source of our revenue. As we intend
to focus our growth on our Attorney-Related Loan products, changes in the legal industry, including a significant decrease in the
number of litigation cases in the United States, reform of the tort industry that reduces the ability of plaintiffs to bring cases
or reduces the damages plaintiffs can receive, or a significant increase in the unemployment rate for attorneys, could, individually
or in the aggregate, have a material adverse effect on our profitability, financial condition and growth of our business.
A substantial portion of our loan portfolio consists of multifamily
real estate loans and commercial real estate loans, which have a higher degree of risk than other types of loans.
At March 31, 2017, we had $92.8 million of multifamily
loans and $21.3 million of commercial real estate loans. Multifamily and commercial real estate loans represented 39.4% of our
total loan portfolio at March 31, 2017. Multifamily and commercial real estate loans are often larger and involve greater risks
than other types of lending. Because payments on such loans are often dependent on the successful operation or development of the
property or business involved, repayment of such loans is often more sensitive than other types of loans to adverse conditions
in the real estate market or the general business climate and economy. Accordingly, a downturn in the real estate market and a
challenging business and economic environment may increase our risk related to multifamily and commercial real estate loans. Unlike
residential mortgage loans, which generally are made on the basis of the borrower's ability to make repayment from their
employment and other income and which are secured by real property whose value tends to be more easily ascertainable, multifamily
and commercial real estate loans typically are made on the basis of the borrower's ability to make repayment from the cash
flow of the commercial venture. If the cash flow from business operations is reduced, the borrower's ability to repay the loan
may be impaired. Due to the larger average size of each multifamily and commercial real estate loan as compared with other loans
such as residential loans, as well as collateral that is generally less readily-marketable, losses incurred on a small number of
multifamily and commercial real estate loans could have a material adverse impact on our financial condition and results of operations.
We expect to increase our originations of
consumer loans, including post-settlement consumer and structured settlement loans, and such loans generally carry greater risk
than loans secured by owner-occupied, 1-4 family real estate, and these risks will increase as we continue to increase originations
of these types of loans.
At March 31, 2017, our consumer loans totaled
$11.0 million, or 3.8% of our total loan portfolio, of which $3.7 million, or 33.6%, were post-settlement consumer loans and $1.6
million, or 14.1%, were structured settlement loans. Consumer loans typically have shorter terms, lower balances, higher yields
and higher risks of default than 1-4 family residential loans. Consumer loan collections are dependent on the borrower's
continuing financial stability and are therefore more likely to be affected by adverse personal circumstances, such as a loss
of employment or unexpected medical costs. While our consumer Attorney-Related Loans, which consist of post-settlement consumer
and structured settlement loans ("Consumer Attorney-Related Loans"), are typically well secured by the settlement
amount, we can still be exposed to the financial stability of the borrower as a result of unforeseen rulings or administrative
legal anomalies with a particular borrower's settlement that eliminate or greatly reduce their settlement amount. Furthermore,
the application of various federal and state laws, including bankruptcy and insolvency laws, may limit our ability to recover
on such loans. As we increase our originations of consumer loans, it may become necessary to increase our provision for loan losses
in the event our losses on these loans increase, which would reduce our profits.
As a business operating in the financial services industry, our
business and operations may be adversely affected in numerous and complex ways by weak economic conditions.
Our business and operations, which primarily
consist of lending money to customers in the form of loans, borrowing money from customers in the form of deposits and investing
in securities, are sensitive to general business and economic conditions in the United States. If the U.S. economy weakens, our
growth and profitability from our lending, deposit and investment operations could be constrained. Uncertainty about the federal
fiscal policymaking process, the medium and long-term fiscal outlook of the federal government, and future tax rates is a concern
for
13
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businesses, consumers and investors in the United States. In addition,
economic conditions in foreign countries, including uncertainty over the stability of the euro currency, could affect the stability
of global financial markets, which could hinder U.S. economic growth. Weak economic conditions are characterized by deflation,
fluctuations in debt and equity capital markets, a lack of liquidity and/or depressed prices in the secondary market for mortgage
loans, increased delinquencies on mortgage, consumer and commercial loans, residential and commercial real estate price declines
and lower home sales and commercial activity. The current economic environment is also characterized by interest rates at historically
low levels, which impacts our ability to attract deposits and to generate attractive earnings through our investment portfolio.
All of these factors are detrimental to our business, and the interplay between these factors can be complex and unpredictable.
Our business is also significantly affected by monetary and related policies of the U.S. federal government and its agencies. Changes
in any of these policies are influenced by macroeconomic conditions and other factors that are beyond our control. Adverse economic
conditions and government policy responses to such conditions could have a material adverse effect on our business, financial condition,
results of operations and prospects.
A substantial majority of our loans and operations are in New
York, and therefore our business is particularly vulnerable to a downturn in the New York City economy.
Unlike larger financial institutions that are
more geographically diversified, a large portion of our business is concentrated primarily in the state of New York, and in New
York City in particular. As of December 31, 2016, 80.9% of our loan portfolio was in New York and our loan portfolio had concentrations
of 64.0% in New York City. If the local economy, and particularly the real estate market, declines, the rates of delinquencies,
defaults, foreclosures, bankruptcies and losses in our loan portfolio would likely increase. As a result of this lack of diversification
in our loan portfolio, a downturn in the local economy generally and real estate market specifically could significantly reduce
our profitability and growth and adversely affect our financial condition.
Interest rate shifts may reduce net interest income and otherwise
negatively impact our financial condition and results of operations.
The majority of our banking assets are monetary
in nature and subject to risk from changes in interest rates. Like most financial institutions, our earnings and cash flows depend
to a great extent upon the level of our net interest income, or the difference between the interest income we earn on loans, investments
and other interest earning assets, and the interest we pay on interest bearing liabilities, such as deposits and borrowings. Changes
in interest rates can increase or decrease our net interest income, because different types of assets and liabilities may react
differently, and at different times, to market interest rate changes.
When interest bearing liabilities mature or
reprice more quickly, or to a greater degree than interest earning assets in a period, an increase in interest rates could reduce
net interest income. Similarly, when interest earning assets mature or reprice more quickly, or to a greater degree than interest
bearing liabilities, falling interest rates could reduce net interest income. Additionally, an increase in interest rates may,
among other things, reduce the demand for loans and our ability to originate loans and decrease loan repayment rates. A decrease
in the general level of interest rates may affect us through, among other things, increased prepayments on our loan portfolio and
increased competition for deposits. Accordingly, changes in the level of market interest rates affect our net yield on interest
earning assets, loan origination volume and our overall results. Although our asset-liability management strategy is designed to
control and mitigate exposure to the risks related to changes in market interest rates, those rates are affected by many factors
outside of our control, including governmental monetary policies, inflation, deflation, recession, changes in unemployment, the
money supply, international disorder and instability in domestic and foreign financial markets.
Our small size makes it more difficult for
us to compete.
Our small size makes it more difficult to compete
with other financial institutions which are generally larger and can more easily afford to invest in the marketing and technologies
needed to attract and retain customers. Because our principal source of income is the net interest income we earn on our loans
and investments after deducting interest paid on deposits and other sources of funds, our ability to generate the revenues needed
to cover our expenses and finance such investments is limited by the size of our loan and investment portfolios. In addition, we
compete with many larger financial institutions and other financial companies who operate in the merchant services business.
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Accordingly, we are not always able to offer new products and services
as quickly as our competitors. Our lower earnings also make it more difficult to offer competitive salaries and benefits. As a
smaller institution, we are also disproportionately affected by the continually increasing costs of compliance with new banking
and other regulations.
We may not be able to grow, and if we do
we may have difficulty managing that growth.
Our business strategy is to continue to grow
our assets and expand our operations, including through potential strategic acquisitions. Our ability to grow depends, in part,
upon our ability to expand our market share, successfully attract core deposits, and to identify loan and investment opportunities
as well as opportunities to generate fee-based income. We can provide no assurance that we will be successful in increasing the
volume of our loans and deposits at acceptable levels and upon terms acceptable to us. We also can provide no assurance that we
will be successful in expanding our operations organically or through strategic acquisition while managing the costs and implementation
risks associated with this growth strategy.
We expect to continue to experience growth in
the number of our employees and customers and the scope of our operations. Our success will depend upon the ability of our officers
and key employees to continue to implement and improve our operational and other systems, to manage multiple, concurrent customer
relationships, and to hire, train and manage our employees. In the event that we are unable to perform all these tasks and meet
these challenges effectively, including continuing to attract core deposits, our operations, and consequently our earnings, could
be adversely impacted.
We rely heavily on our management team, our board of directors
and our advisory board members and our business could be adversely affected by the unexpected loss of one or more of our officers
or directors.
We are led by a management team with substantial
experience in the markets that we serve and the financial products that we offer. Our operating strategy focuses on providing products
and services through long-term relationship managers. Additionally, we rely heavily on our directors' and our advisory board
members' extensive business and personal contacts and relationships to help establish and maintain our customer base. Accordingly,
our success depends in large part on the performance of our key officers and directors, as well as on our ability to attract, motivate
and retain highly qualified senior and middle management. Competition for employees is intense, and the process of identifying
key personnel with the combination of skills and attributes required to execute our business plan may be lengthy. We may not be
successful in retaining our key employees or directors and the unexpected loss of services of one or more of our officers or directors
could have a material adverse effect on our business because of their skills, knowledge of our market and financial products, years
of industry experience, long-term business and customer relationships and the difficulty of finding qualified replacement personnel.
If the services of any of our key personnel should become unavailable for any reason, we may not be able to identify and hire qualified
persons on terms acceptable to us, which could have an adverse effect on our business, financial condition and results of operations.
Our merchants or ISOs may be unable to satisfy obligations for
which we may ultimately be liable.
We are subject to the risk of our merchants
or ISOs being unable to satisfy obligations for which we may ultimately be liable. If we are unable to collect amounts due from
a merchant or ISO because of insolvency or other reasons, we may bear the loss for those full amounts. We manage our credit risk
and attempt to mitigate our risk by obtaining reserves, both from merchants and ISOs, and through other contractual remedies. It
is possible, however, that a default on such obligations by one or more of our ISOs or merchants, could, individually or in the
aggregate, have a material adverse effect on our business, financial condition and results of operations.
Fraud by merchants or others could have a material adverse effect
on our business and financial condition.
We may be subject to liability for fraudulent
transactions initiated by merchants or others. Examples of such fraud include when a merchant or other party knowingly uses a stolen
or counterfeit card to make a transaction, or if a merchant intentionally fails to deliver the merchandise or services sold in
an otherwise valid transaction. Criminals are using increasingly sophisticated methods to engage in illegal activities such as
counterfeiting and fraud. It is possible that incidents of fraud could increase in the future. Failure to effectively manage risk
and prevent fraud would increase
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our chargeback liability or other liability. Increases in chargebacks
or other liability could have a material adverse effect on our business, financial condition, and results of operations.
Changes in card network rules or standards could adversely affect
our business.
In order to provide our merchant services, we
are members of the Visa and MasterCard networks. As such, we are subject to card network rules that could subject us or our ISOs
and merchants to a variety of fines or penalties that may be assessed on us, our ISOs, and our merchants. The termination of our
membership, or the revocation of registration of any of our ISOs, or any changes in card network rules or standards could increase
the cost of operating our merchant servicer business or limit our ability to provide merchant services to or through our customers,
and could have a material adverse effect on our business, financial condition and results of operations.
Changes in card network fees could impact our operations.
From time to time, the card networks increase
the fees (known as interchange fees) that they charge to acquirers and we charge to our merchants. It is possible that competitive
pressures will result in us absorbing a portion of such increases in the future, which would increase our costs, reduce our profit
margin and adversely affect our business and financial condition. In addition, the card networks require certain capital requirements.
An increase in the required capital level would further limit our use of capital for other purposes.
We are subject to certain operational risks, including, but not
limited to, customer or employee fraud and data processing system failures and errors.
Employee errors and employee and customer misconduct
could subject us to financial losses or regulatory sanctions and seriously harm our reputation. Misconduct by our employees could
include hiding unauthorized activities from us, improper or unauthorized activities on behalf of our customers or improper use
of confidential information. It is not always possible to prevent employee errors and misconduct, and the precautions we take to
prevent and detect this activity may not be effective in all cases. Employee errors could also subject us to financial claims for
negligence.
We maintain a system of internal controls and
insurance coverage to mitigate against operational risks, including data processing system failures and errors and customer or
employee fraud. If our internal controls fail to prevent or detect an occurrence, or if any resulting loss is not insured or exceeds
applicable insurance limits, it could have a material adverse effect on our business, financial condition and results of operations.
If the allowance for loan losses is not sufficient to cover actual
loan losses, earnings could decrease.
Loan customers may not repay their loans according
to the terms of their loans, and the collateral securing the payment of their loans may be insufficient to assure repayment. We
may experience significant credit losses, which could have a material adverse effect on our operating results. Various assumptions
and judgments about the collectability of the loan portfolio are made, including the creditworthiness of borrowers and the value
of the real estate and other assets serving as collateral for the repayment of many loans. In determining the amount of the allowance
for loan losses, management reviews the loans and the loss and delinquency experience and evaluates economic conditions.
At March 31, 2017, our allowance for loan losses
as a percentage of total loans, net of unearned income, was 1.21%. The determination of the appropriate level of allowance is subject
to judgment and requires us to make significant estimates of current credit risks and future trends, all of which are subject to
material changes. If assumptions prove to be incorrect, the allowance for loan losses may not cover probable incurred losses in
the loan portfolio at the date of the financial statements. Significant additions to the allowance would materially decrease net
income. Non-performing loans may increase and non-performing or delinquent loans may adversely affect future performance. We had
no non-performing loans at March 31, 2017. In addition, federal and state regulators periodically review the allowance for loan
losses and may require an increase in the allowance for loan losses or recognize further loan charge-offs. Any significant increase
in our allowance for loan losses or loan charge-offs as
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required by these regulatory agencies could have a material adverse
effect on our results of operations and financial condition.
Our loan portfolio is unseasoned.
With a growing and generally
unseasoned loan portfolio, our credit risk may continue to increase and our future performance could be adversely affected. While
we believe we have underwriting standards designed to manage normal lending risks, it is difficult to assess the future performance
of our loan portfolio due to the recent origination of many of these loans. As a result, it is difficult to predict whether any
of our loans will become non-performing or delinquent loans, or whether we will have any non-performing or delinquent loans that
will adversely affect our future performance. At March 31, 2017, the average age of our loans was 4.26 years, 2.76 years, 2.98
years, 0.41 years, 3.07 years and 0.93 years for our 1-4 family residential loans, multifamily loans, commercial real estate loans,
construction loans, commercial loans and consumer loans, respectively. At March 31, 2017, the average age of our loan portfolio
was 2.10 years.
Changes in the valuation of our securities
portfolio could hurt our profits and reduce our stockholders' equity.
Our securities portfolio may be impacted by
fluctuations in market value, potentially reducing accumulated other comprehensive income and/or earnings. Fluctuations in market
value may be caused by changes in market interest rates, lower market prices for securities and limited investor demand. Management
evaluates securities for other-than-temporary impairment on a quarterly basis, with more frequent evaluation for selected issues.
In analyzing a debt issuer's financial condition, management considers whether the securities are issued by the federal government
or its agencies, whether downgrades by bond rating agencies have occurred, industry analysts' reports and, to a lesser extent
given the relatively insignificant levels of depreciation in our debt portfolio, spread differentials between the effective rates
on instruments in the portfolio compared to risk-free rates. In analyzing an equity issuer's financial condition, management
considers industry analysts' reports, financial performance and projected target prices of investment analysts within a one-year
time frame. If this evaluation shows impairment to the actual or projected cash flows associated with one or more securities, a
potential loss to earnings may occur. Changes in interest rates can also have an adverse effect on our financial condition, as
our available-for-sale securities are reported at their estimated fair value, and therefore are impacted by fluctuations in interest
rates. We increase or decrease our stockholders' equity by the amount of change in the estimated fair value of the available-for-sale
securities, net of taxes. Declines in market value could result in other-than-temporary impairments of these assets, which would
lead to accounting charges that could have a material adverse effect on our net income and capital levels. Refer to "Management's
Discussion and Analysis of Financial Condition and Results of Operations—Securities Portfolio."
We may not be able to adequately measure and limit the credit
risk associated with our loan portfolio, which could adversely affect our profitability.
As a part of the products and services that
we offer, we make commercial and commercial real estate loans. The principal economic risk associated with each class of loans
is the creditworthiness of the borrower, which is affected by the strength of the relevant business market segment, local market
conditions, and general economic conditions. Additional factors related to the credit quality of commercial loans include the quality
of the management of the business and the borrower's ability both to properly evaluate changes in the supply and demand characteristics
affecting our market for products and services, and to effectively respond to those changes. Additional factors related to the
credit quality of commercial real estate loans include tenant vacancy rates and the quality of management of the property. A failure
to effectively measure and limit the credit risk associated with our loan portfolio could have an adverse effect on our business,
financial condition, and results of operations.
Changes in economic conditions could cause an increase in delinquencies
and nonperforming assets, including loan charge-offs, which could depress our net income and growth.
Our loan portfolio includes many real estate
secured loans, demand for which may decrease during economic downturns as a result of, among other things, an increase in unemployment,
a decrease in real estate values and, a slowdown in housing. If we see negative economic conditions develop in the United States
as a whole or our New York market, we could experience higher delinquencies and loan charge-offs, which would reduce our net income
and adversely affect our financial condition. Furthermore, to the extent that real estate collateral is obtained through
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foreclosure, the costs of holding and marketing the real estate
collateral, as well as the ultimate values obtained from disposition, could reduce our earnings and adversely affect our financial
condition.
We operate in a highly competitive industry and face significant
competition from other financial institutions and financial services providers, which may decrease our growth or profits.
Consumer and commercial banking as well as merchant
services are highly competitive industries. Our market area contains not only a large number of community and regional banks, but
also a significant presence of the country's largest commercial banks. We compete with other state and national financial
institutions, as well as savings and loan associations, savings banks, and credit unions, for deposits and loans. In addition,
we compete with financial intermediaries, such as consumer finance companies, specialty finance companies, commercial finance companies,
mortgage banking companies, insurance companies, securities firms, mutual funds, and several government agencies, as well as major
retailers, all actively engaged in providing various types of loans and other financial services, including merchant services.
Competition for Attorney-Related Loans is derived primarily from eight to ten nationally-oriented financial companies that specialize
in this market. Some of these companies are focused exclusively on loans to law firms, while others offer loans to plaintiffs as
well. We also face significant competition from many larger institutions, including large commercial banks and third party processors
that operate in the merchant services business, and our ability to grow that portion of our business depends on us being able to
continue to attract and retain ISOs and merchants. Some of these competitors may have a long history of successful operations nationally
as well as in our market area and greater ties to businesses or the legal community and more expansive banking relationships, as
well as more established depositor bases, fewer regulatory constraints, and lower cost structures than we do. Competitors with
greater resources may possess an advantage through their ability to maintain numerous banking locations in more convenient sites,
to conduct more extensive promotional and advertising campaigns, or to operate a more developed technology platform. Due to their
size, many competitors may offer a broader range of products and services, as well as better pricing for certain products and services
than we can offer. For example, in the current low interest rate environment, competitors with lower costs of capital may solicit
our customers to refinance their loans with a lower interest rate. Further, increased competition among financial services companies
due to the recent consolidation of certain competing financial institutions may adversely affect our ability to market our products
and services. Technology has lowered barriers to entry and made it possible for banks and specifically finance companies to compete
in our market area and for non-banks to offer products and services traditionally provided by banks.
The financial services industry could become
even more competitive as a result of legislative, regulatory, and technological changes and continued consolidation. Banks, securities
firms, and insurance companies can merge under the umbrella of a financial holding company, which can offer virtually any type
of financial service, including banking, securities underwriting, insurance (both agency and underwriting), and merchant banking.
Our ability to compete successfully depends
on a number of factors, including:
·
our ability to develop, maintain, and build upon long-term customer relationships based on quality service and high ethical
standards;
·
our ability to attract and retain qualified employees to operate our business effectively;
·
our ability to expand our market position;
·
the scope, relevance, and pricing of products and services that we offer to meet customer needs and demands;
·
the rate at which we introduce new products and services relative to our competitors;
·
customer satisfaction with our level of service; and
·
industry and general economic trends.
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Failure to perform in any of these areas could
significantly weaken our competitive position, which could adversely affect our growth and profitability, which, in turn, could
harm our business, financial condition, and results of operations.
A lack of liquidity could adversely affect our financial condition
and results of operations.
Liquidity is essential to our business. We rely
on our ability to generate deposits and effectively manage the repayment and maturity schedules of our loans to ensure that we
have adequate liquidity to fund our operations. An inability to raise funds through deposits, borrowings, the sale of loans and
other sources could have a substantial negative effect on our liquidity. Our most important source of funds is deposits. Deposit
balances can decrease when customers perceive alternative investments as providing a better risk/return tradeoff. If customers
move money out of bank deposits and into other investments such as money market funds, we would lose a relatively low-cost source
of funds, increasing our funding costs and reducing our net interest income and net income.
Other primary sources of funds consist of cash
flows from operations, maturities and sales of investment securities, and proceeds from the issuance and sale of our equity securities
to investors. Additional liquidity is provided by the ability to borrow from the Federal Home Loan Bank of New York. We also may
borrow funds from third-party lenders, such as other financial institutions. Our access to funding sources in amounts adequate
to finance or capitalize our activities, or on terms that are acceptable to us, could be impaired by factors that affect us directly
or the financial services industry or economy in general, such as disruptions in the financial markets or negative views and expectations
about the prospects for the financial services industry. Our access to funding sources could also be affected by a decrease in
the level of our business activity as a result of a downturn in our markets or by one or more adverse regulatory actions against
us.
Any decline in available funding could adversely
impact our ability to originate loans, invest in securities, meet our expenses, or to fulfill obligations such as repaying our
borrowings or meeting deposit withdrawal demands, any of which could have a material adverse impact on our liquidity, business,
financial condition and results of operations.
Our ten largest deposit clients account for 34.0% of our total
deposits.
As of March 31, 2017, our ten largest bank depositors
accounted for, in the aggregate, 34.0% of our total deposits. As a result, a material decrease in the volume of those deposits
by a relatively small number of our depositors could reduce our liquidity, in which event it could became necessary for us to replace
those deposits with higher-cost deposits or FHLB borrowings, which would adversely affect our net interest income and, therefore,
our results of operations.
As a bank holding company, the sources of funds available to
us are limited.
Any future constraints on liquidity at the holding
company level could impair our ability to declare and pay dividends on our common stock. In some instances, notice to, or approval
from, the FRB may be required prior to our declaration or payment of dividends. Further, our operations are primarily conducted
by our subsidiary, Esquire Bank, which is subject to significant regulation. Federal banking laws restrict the payment of dividends
by banks to their holding companies, and Esquire Bank will be subject to these restrictions in paying dividends to us. Because
our ability to receive dividends or loans from Esquire Bank is restricted, our ability to pay dividends to our stockholders is
also restricted.
Additionally, the right of a bank holding company
to participate in the assets of its subsidiary bank in the event of a bank-level liquidation or reorganization is subject to the
claims of the bank's creditors, including depositors, which take priority, except to the extent that the holding company
may be a creditor with a recognized claim.
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Our ability to maintain our reputation is critical to the success
of our business, and the failure to do so may materially adversely affect our performance.
We are a community bank, and our reputation
is one of the most valuable components of our business. As such, we strive to conduct our business in a manner that enhances our
reputation. This is done, in part, by recruiting, hiring, and retaining employees who share our core values of being an integral
part of the communities we serve, delivering superior service to our customers, and caring about our customers and associates.
If our reputation is negatively affected, by the actions of our employees or otherwise, our business and, therefore, our operating
results may be materially adversely affected. Further, negative public opinion can expose us to litigation and regulatory action
as we seek to implement our growth strategy, which would adversely affect our business, financial condition and results of operations.
We have lower lending limits and different lending risks than
certain of our larger, more diversified competitors.
We are a community banking institution that
provides banking services to the local communities in the market areas in which we operate. Our ability to diversify our economic
risks is limited by our own local markets and economies. We lend primarily to individuals and to small to medium-sized businesses,
which may expose us to greater lending risks than those of banks that lend to larger, better-capitalized businesses with longer
operating histories. In addition, our legally mandated lending limits are lower than those of certain of our competitors that have
more capital than we do. As a result of our size, at March 31, 2017, our legal lending limit was $7.8 million, and there was one
loan within 10% of this limit. Our lower lending limits may discourage borrowers with lending needs that exceed our limits from
doing business with us. We may try to serve such borrowers by selling loan participations to other financial institutions; however,
this strategy may not succeed.
We face risks related to our operational, technological and organizational
infrastructure.
Our ability to grow and compete is dependent
on our ability to build or acquire the necessary operational and technological infrastructure and to manage the cost of that infrastructure
as we expand. Similar to other large corporations, operational risk can manifest itself in many ways, such as errors related to
failed or inadequate processes, faulty or disabled computer systems, fraud by employees or outside persons and exposure to external
events. As discussed below, we are dependent on our operational infrastructure to help manage these risks. In addition, we are
heavily dependent on the strength and capability of our technology systems which we use both to interface with our customers and
to manage our internal financial and other systems. Our ability to develop and deliver new products that meet the needs of our
existing customers and attract new ones depends on the functionality of our technology systems. Additionally, our ability to run
our business in compliance with applicable laws and regulations is dependent on these infrastructures.
We continuously monitor our operational and
technological capabilities and make modifications and improvements when we believe it will be cost effective to do so. In some
instances, we may build and maintain these capabilities ourselves. We also outsource some of these functions to third parties.
Specifically, we depend on third parties to provide our core systems processing, essential web hosting and other internet systems,
deposit processing and other processing services. In connection with our merchant services business, we (and our ISOs) rely on
various third parties to provide processing and clearing and settlement services to us in connection with card transactions. If
these third-party service providers experience difficulties, fail to comply with banking regulations or terminate their services
and we are unable to replace them with other service providers, our operations could be interrupted. If an interruption were to
continue for a significant period of time, our business, financial condition and results of operations could be adversely affected,
perhaps materially. Even if we are able to replace them, it may be at a higher cost to us, which could adversely affect our business,
financial condition and results of operations. We also face risk from the integration of new infrastructure platforms and/or new
third party providers of such platforms into its existing businesses.
A failure in our operational systems or infrastructure, or those
of third parties, could impair our liquidity, disrupt our businesses, result in the unauthorized disclosure of confidential information,
damage our reputation and cause financial losses.
Our business, and in particular, our merchant
services business, is partially dependent on our ability to process and monitor, on a daily basis, a large number of transactions,
many of which are highly complex, across numerous and diverse markets. These transactions, as well as the information technology
services we provide to
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clients, often must adhere to client-specific guidelines, as well
as legal and regulatory standards. Due to the breadth of our client base and our geographical reach, developing and maintaining
our operational systems and infrastructure is challenging, particularly as a result of rapidly evolving legal and regulatory requirements
and technological shifts. Our financial, accounting, data processing or other operating systems and facilities, and, as discussed
above, those the third-party service providers upon which we depend, may fail to operate properly or become disabled as a result
of events that are wholly or partially beyond our control, such as a spike in transaction volume, cyber-attack or other unforeseen
catastrophic events, which may adversely affect our ability to process these transactions or provide services.
The occurrence of fraudulent activity, breaches or failures of
our information security controls or cybersecurity-related incidents could have a material adverse effect on our business, financial
condition and results of operations.
Our operations rely on the secure processing,
storage and transmission of confidential and other sensitive business and consumer information on our computer systems and networks,
as well as those of our ISOs and processors. Under the card network rules and various federal and state laws, we are responsible
for safeguarding such information. Although we take protective measures to maintain the confidentiality, integrity and availability
of information across all geographic and product lines, and endeavor to modify these protective measures as circumstances warrant,
the nature of the threats continues to evolve. As a result, our computer systems, software and networks are vulnerable to unauthorized
access, loss or destruction of data (including confidential client information), account takeovers, unavailability of service,
computer viruses or other malicious code, cyber-attacks and other events that could have an adverse security impact. Despite the
defensive measures we take to manage our internal technological and operational infrastructure, these threats have in the past
and may in the future originate externally from third parties such as foreign governments, organized crime and other hackers, and
outsource or infrastructure-support providers and application developers, or may originate internally from within our organization.
Given the increasingly high volume of our transactions, certain errors may be repeated or compounded before they can be discovered
and rectified. In addition, security breaches or failures could result in the bank incurring liability to ISOs, members of the
card network and card issuers in relation to our merchant banking business.
In particular, information pertaining to us
and our customers is maintained, and transactions are executed, on the networks and systems of us, our customers and certain of
our third-party partners, such as our online banking or reporting systems, ISO's customers and merchants who are part of
our merchant banking business. The secure maintenance and transmission of confidential information, as well as execution of transactions
over these systems, are essential to protect us and our customers against fraud and security breaches and to maintain our clients'
confidence. Breaches of information security also may occur, and in infrequent cases have occurred, through intentional or unintentional
acts by those having access or gaining access to our systems or our customers' or counterparties' confidential information, including
employees. In addition, increases in criminal activity levels and sophistication, advances in computer capabilities, new discoveries,
vulnerabilities in third-party technologies (including browsers and operating systems) or other developments could result in a
compromise or breach of the technology, processes and controls that we use to prevent fraudulent transactions and to protect data
about us, our customers and underlying transactions, as well as the technology used by our customers to access our systems. We
cannot be certain that the security measures we or our ISOs or processors have in place to protect this sensitive data will be
successful or sufficient to protect against all current and emerging threats designed to breach our systems or those of our ISOs
or processors. Although we have developed, and continue to invest in, systems and processes that are designed to detect and prevent
security breaches and cyber-attacks and periodically test our security, a breach of our systems, or those of our ISOs or processors,
could result in losses to us or our customers; loss of business and/or customers; damage to our reputation; the incurrence of additional
expenses (including the cost of notification to consumers, credit monitoring and forensics, and fees and fines imposed by the card
networks); disruption to our business; our inability to grow our online services or other businesses; additional regulatory scrutiny
or penalties; or our exposure to civil litigation and possible financial liability — any of which could have a material adverse
effect on our business, financial condition and results of operations.
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If our enterprise risk management framework is not effective
at mitigating risk and loss to us, we could suffer unexpected losses and our results of operations could be materially adversely
affected.
Our enterprise risk management framework seeks
to achieve an appropriate balance between risk and return, which is critical to optimizing stockholder value. We have established
processes and procedures intended to identify, measure, monitor, report and analyze the types of risk to which we are subject,
including credit, liquidity, operational, regulatory compliance and reputational. However, as with any risk management framework,
there are inherent limitations to our risk management strategies as there may exist, or develop in the future, risks that we have
not appropriately anticipated or identified. If our risk management framework proves ineffective, we could suffer unexpected losses
and our business and results of operations could be materially adversely affected.
Changes in accounting standards could materially impact our financial
statements.
From time to time, the Financial Accounting
Standards Board or the SEC may change the financial accounting and reporting standards that govern the preparation of our financial
statements. Such changes may result in us being subject to new or changing accounting and reporting standards. In addition, the
bodies that interpret the accounting standards (such as banking regulators, outside auditors or management) may change their interpretations
or positions on how these standards should be applied. These changes may be beyond our control, can be hard to predict, and can
materially impact how we record and report our financial condition and results of operations. In some cases, we could be required
to apply a new or revised standard retrospectively, or apply an existing standard differently, also retrospectively, in each case
resulting in our needing to revise or restate prior period financial statements.
Risks Related to Our Industry and Regulation
Our business, financial condition, results of operations and
future prospects could be adversely affected by the highly regulated environment and the laws and regulations that govern our operations,
corporate governance, executive compensation and accounting principles, or changes in any of them.
As a bank holding company, we are subject to
extensive examination, supervision and comprehensive regulation by various federal and state agencies that govern almost all aspects
of our operations. These laws and regulations are not intended to protect our stockholders. Rather, these laws and regulations
are intended to protect customers, depositors, the Deposit Insurance Fund (the "DIF") and the overall financial stability
of the U.S. These laws and regulations, among other matters, prescribe minimum capital requirements, impose limitations on the
business activities in which we can engage, limit the dividend or distributions that Esquire Bank can pay to us, restrict the ability
of institutions to guarantee our debt, and impose certain specific accounting requirements on us that may be more restrictive and
may result in greater or earlier charges to earnings or reductions in our capital than generally accepted accounting principles
would require. Compliance with these laws and regulations is difficult and costly, and changes to these laws and regulations often
impose additional compliance costs. Our failure to comply with these laws and regulations, even if the failure follows good faith
effort or reflects a difference in interpretation, could subject us to restrictions on our business activities, fines and other
penalties, any of which could adversely affect our results of operations, capital base and the price of our securities. Further,
any new laws, rules and regulations could make compliance more difficult or expensive.
Likewise, the Company operates in an environment
that imposes income taxes on its operations at both the federal and state levels to varying degrees. Strategies and operating routines
have been implemented to minimize the impact of these taxes. Consequently, any change in tax legislation could significantly alter
the effectiveness of these strategies.
The net deferred tax asset reported on the Company's
balance sheet generally represents the tax benefit of future deductions from taxable income for items that have already been recognized
for financial reporting purposes. The bulk of these deferred tax assets consists of deferred loan loss deductions, deferred compensation
deductions and unrealized losses on available-for-sale securities. The net deferred tax asset is measured by applying currently-enacted
income tax rates to the accounting period during which the tax benefit is expected to be realized. As of March 31, 2017, the Company's
net deferred tax asset was $2.6 million.
The President of the United States and some
members of Congress have announced plans to introduce legislation that would lower the federal corporate income tax rate from its
current level of 35%. If this tax rate reduction is enacted, it will result in an immediate impairment of the recorded net deferred
tax asset because the future
22
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tax benefit of these deferrals would need to be re-measured for
the impact of the lower tax rate. Any such impairment would be recorded as a charge to the Company's earnings and would be
recognized in the quarter during which the lower rate is enacted.
Federal regulators periodically examine our business, and we
may be required to remediate adverse examination findings.
The FRB, the OCC and the FDIC, periodically
examine our business, including our compliance with laws and regulations. If, as a result of an examination, a federal banking
agency were to determine that our financial condition, capital resources, asset quality, earnings prospects, management, liquidity
or other aspects of any of our operations had become unsatisfactory, or that we were in violation of any law or regulation, it
may take a number of different remedial actions as it deems appropriate. These actions include the power to enjoin "unsafe
or unsound" practices, to require affirmative action to correct any conditions resulting from any violation or practice,
to issue an administrative order that can be judicially enforced, to direct an increase in our capital, to restrict our growth,
to assess civil monetary penalties against our officers or directors, to remove officers and directors and, if it is concluded
that such conditions cannot be corrected or there is an imminent risk of loss to depositors, to terminate our deposit insurance
and place us into receivership or conservatorship. If we become subject to any regulatory actions, it could have a material adverse
effect on our business, results of operations, financial condition and growth prospects.
Legislative and regulatory actions taken now or in the future
may increase our costs and impact our business, governance structure, financial condition or results of operations.
The Dodd-Frank Wall Street Reform and Consumer
Protection Act ("Dodd-Frank Act"), among other things, imposed new capital requirements on bank holding companies;
changed the base for FDIC insurance assessments to a bank's average consolidated total assets minus average tangible equity, rather
than upon its deposit base; permanently raised the current standard deposit insurance limit to $250,000; and expanded the FDIC's
authority to raise insurance premiums. The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank
Act") established the Consumer Financial Protection Bureau as an independent entity within the FRB, which has broad rulemaking,
supervisory and enforcement authority over consumer financial products and services, including deposit products, residential mortgages,
home-equity loans and credit cards and contains provisions on mortgage-related matters, such as steering incentives, determinations
as to a borrower's ability to repay and prepayment penalties. Although the applicability of certain elements of the Dodd-Frank
Act is limited to institutions with more than $10 billion in assets, there can be no guarantee that such applicability will
not be extended in the future or that regulators or other third parties will not seek to impose such requirements on institutions
with less than $10 billion in assets, such as Esquire Bank.
Compliance with the Dodd-Frank Act and its implementing
regulations has and will continue to result in additional operating and compliance costs that could have a material adverse effect
on our business, financial condition, results of operations and growth prospects.
In addition, new proposals for legislation continue
to be introduced in the U.S. Congress that could further substantially increase regulation of the bank and non-bank financial services
industries and impose restrictions on the operations and general ability of firms within the industry to conduct business consistent
with historical practices. Federal and state regulatory agencies also frequently adopt changes to their regulations or change the
manner in which existing regulations are applied. Certain aspects of current or proposed regulatory or legislative changes to laws
applicable to the financial industry, if enacted or adopted, may impact the profitability of our business activities, require more
oversight or change certain of our business practices, including the ability to offer new products, obtain financing, attract deposits,
make loans and achieve satisfactory interest spreads and could expose us to additional costs, including increased compliance costs.
These changes also may require us to invest significant management attention and resources to make any necessary changes to operations
to comply and could have an adverse effect on our business, financial condition and results of operations.
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As a result of the Dodd-Frank Act and recent rulemaking, we are
subject to more stringent capital requirements.
In July 2013, the U.S. federal banking authorities
approved new regulatory capital rules implementing the Basel III regulatory capital reforms effecting certain changes required
by the Dodd-Frank Act. The new regulatory capital requirements are generally applicable to all U.S. banks as well as to bank and
saving and loan holding companies, other than "small bank holding companies" (generally bank holding companies with
consolidated assets of less than $1.0 billion, such as the Company). The new regulatory capital rules not only increase most
of the required minimum regulatory capital ratios, but also introduce a new common equity Tier 1 capital ratio and the concept
of a capital conservation buffer. The new regulatory capital rules also expand the current definition of capital by establishing
additional criteria that capital instruments must meet to be considered additional Tier 1 and Tier 2 capital. In order
to be a "well-capitalized" depository institution under the new regime, an institution must maintain a common equity
Tier 1 capital ratio of 6.5% or more; a Tier 1 capital ratio of 8% or more; a total capital ratio of 10% or more; and
a leverage ratio of 5% or more. Institutions must also maintain a capital conservation buffer consisting of common equity Tier 1
capital. The new regulatory capital rules became effective as applied to Esquire Bank on January 1, 2015 with a phase-in period
that generally extends through January 1, 2019 for many of the changes.
Additionally, on November 2, 2012, the OCC
notified Esquire Bank that it had established minimum capital ratios for Esquire Bank requiring Esquire Bank to maintain, commencing December 1, 2012, a Tier 1 leverage capital ratio of 9.0%, a Tier1 risk-based capital ratio of 11.0% and a total
risk-based capital to risk-weighted assets ratio of 13.0%.
The failure to meet applicable regulatory capital
requirements, including the minimum capital requirements established by the OCC, could result in one or more of our regulators
placing limitations or conditions on our activities, including our growth initiatives, or restricting the commencement of new activities,
and could affect customer and investor confidence, our costs of funds and FDIC insurance costs, our ability to pay dividends on
our common stock, our ability to make acquisitions, and our business, results of operations and financial conditions, generally.
We are subject to the Community Reinvestment Act and fair lending
laws, and failure to comply with these laws could lead to material penalties.
The Community Reinvestment Act ("CRA"),
the Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose nondiscriminatory lending
requirements on financial institutions. The Consumer Financial Protection Bureau, the United States Department of Justice and other
federal agencies are responsible for enforcing these laws and regulations. A successful challenge to an institution's performance
under the CRA or fair lending laws and regulations could result in a wide variety of sanctions, including the required payment
of damages and civil money penalties, injunctive relief, imposition of restrictions on mergers and acquisitions activity and restrictions
on expansion activity. Private parties may also have the ability to challenge an institution's performance under fair lending
laws in private class action litigation.
The FASB has recently issued an accounting standard update that
will result in a significant change in how we recognize credit losses and may have a material impact on our financial condition
or results of operations.
In June 2016, the Financial Accounting Standards
Board ("FASB") issued an accounting standard update, "Financial Instruments-Credit Losses (Topic 326), Measurement
of Credit Losses on Financial Instruments," which replaces the current "incurred loss" model for recognizing
credit losses with an "expected loss" model referred to as the Current Expected Credit Loss ("CECL") model.
Under the CECL model, we will be required to present certain financial assets carried at amortized cost, such as loans held for
investment and held-to-maturity debt securities, at the net amount expected to be collected. The measurement of expected credit
losses is to be based on information about past events, including historical experience, current conditions, and reasonable and
supportable forecasts that affect the collectability of the reported amount. This measurement will take place at the time the financial
asset is first added to the balance sheet and periodically thereafter. This differs significantly from the "incurred loss"
model required under current generally accepted accounting principles ("GAAP"), which delays recognition until it is
probable a loss has been incurred. Accordingly, we expect that the adoption of the CECL model will materially affect how we determine
our allowance for loan losses and could require us to significantly increase our allowance. Moreover, the CECL model may create
more volatility in the level of our allowance for loan losses. If we are required to materially
24
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increase our level of allowance for loan losses for any reason,
such increase could adversely affect our business, financial condition and results of operations.
The new CECL standard will become effective
for us for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years. We are currently evaluating
the impact the CECL model will have on our accounting, but we expect to recognize a one-time cumulative-effect adjustment to our
allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective, consistent
with regulatory expectations set forth in interagency guidance issued at the end of 2016. We cannot yet determine the magnitude
of any such one-time cumulative adjustment or of the overall impact of the new standard on our financial condition or results of
operations.
FDIC deposit insurance assessments may continue to materially
increase in the future, which would have an adverse effect on earnings.
As a member institution of the FDIC, our subsidiary,
Esquire Bank, is assessed a quarterly deposit insurance premium. Failed banks nationwide have significantly depleted the insurance
fund and reduced the ratio of reserves to insured deposits. The FDIC has adopted a Deposit Insurance Fund Restoration Plan, which
requires the FDIC's Deposit Insurance Fund (the "DIF") to attain a 1.35% reserve ratio by September 30,
2020. As a result of this requirement, Esquire Bank could be required to pay significantly higher premiums or additional special
assessments that would adversely affect its earnings, thereby reducing the availability of funds to pay dividends to us.
Monetary policies and regulations of the Federal Reserve could
adversely affect our business, financial condition and results of operations.
In addition to being affected by general economic
conditions, our earnings and growth are affected by the policies of the FRB. An important function of the FRB is to regulate the
money supply and credit conditions. Among the instruments used by the FRB to implement these objectives are open market purchases
and sales of U.S. government securities, adjustments of the discount rate and changes in banks' reserve requirements against bank
deposits. These instruments are used in varying combinations to influence overall economic growth and the distribution of credit,
bank loans, investments and deposits. Their use also affects interest rates charged on loans or paid on deposits.
The monetary policies and regulations of the
FRB have had a significant effect on the operating results of commercial banks in the past and are expected to continue to do so
in the future. The effects of such policies upon our business, financial condition and results of operations cannot be predicted.
We face a risk of noncompliance and enforcement action with the
Bank Secrecy Act and other anti-money laundering statutes and regulations.
The Bank Secrecy Act, the USA Patriot Act and
other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money
laundering program and to file reports such as suspicious activity reports and currency transaction reports. We are required to
comply with these and other anti-money laundering requirements. The federal banking agencies and Financial Crimes Enforcement Network
are authorized to impose significant civil money penalties for violations of those requirements and have recently engaged in coordinated
enforcement efforts against banks and other financial services providers with the U.S. Department of Justice, Drug Enforcement
Administration and Internal Revenue Service. We are also subject to increased scrutiny of compliance with the rules enforced by
the Office of Foreign Assets Control. If our policies, procedures and systems are deemed deficient, we would be subject to liability,
including fines and regulatory actions, which may include restrictions on our ability to pay dividends and the necessity to obtain
regulatory approvals to proceed with certain aspects of our business plan, including our acquisition plans.
Failure to maintain and implement adequate programs
to combat money laundering and terrorist financing could also have serious reputational consequences for us. Any of these results
could have a material adverse effect on our business, financial condition, results of operations and growth prospects.
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The FRB may require us to commit capital resources to support
Esquire Bank.
As a matter of policy, the FRB expects a bank
holding company to act as a source of financial and managerial strength to a subsidiary bank and to commit resources to support
such subsidiary bank. The Dodd-Frank Act codified the FRB's policy on serving as a source of financial strength. Under the "source
of strength" doctrine, the FRB may require a bank holding company to make capital injections into a troubled subsidiary bank
and may charge the bank holding company with engaging in unsafe and unsound practices for failure to commit resources to a subsidiary
bank. A capital injection may be required at times when the holding company may not have the resources to provide it and therefore
may be required to borrow the funds or raise capital. Any loans by a holding company to its subsidiary banks are subordinate in
right of payment to deposits and to certain other indebtedness of such subsidiary bank. In the event of a bank holding company's
bankruptcy, the bankruptcy trustee will assume any commitment by the holding company to a federal bank regulatory agency to maintain
the capital of a subsidiary bank. Moreover, bankruptcy law provides that claims based on any such commitment will be entitled to
a priority of payment over the claims of the institution's general unsecured creditors, including the holders of its note obligations.
Thus, any borrowing that must be done by the Company to make a required capital injection becomes more difficult and expensive
and could have an adverse effect on our business, financial condition and results of operations.
We could be adversely affected by the soundness of other financial
institutions and other third parties we rely on.
Financial services institutions are interrelated
as a result of trading, clearing, counterparty or other relationships. We have exposure to many different industries and counterparties,
and routinely execute transactions with counterparties in the financial services industry, including commercial banks, brokers
and dealers, investment banks and other institutional customers. Many of these transactions expose us to credit risk in the event
of a default by a counterparty or client. In addition, our credit risk may be exacerbated when our collateral cannot be foreclosed
upon or is liquidated at prices not sufficient to recover the full amount of the credit or derivative exposure due. Furthermore,
successful operation of our merchant services business depends on the soundness of ISOs, third party processors, clearing agents
and others that we rely on to conduct our merchant business. Any losses resulting from such third parties could adversely affect
our business, financial condition and results of operations.
We depend on the accuracy and completeness of information about
customers and counterparties.
In deciding whether to extend credit or enter
into other transactions with our existing and potential customers and counterparties, we may rely on information furnished to us
by or on behalf of our existing and potential customers and counterparties, including financial statements and other financial
information. We also may rely on representations of our existing and potential customers and counterparties as to the accuracy
and completeness of that information and, with respect to financial statements, on reports of independent auditors. In deciding
whether to extend credit, we may rely upon our existing and potential customers' representations that their respective financial
statements conform to U.S. generally accepted accounting principles, or GAAP, and present fairly, in all material respects, the
financial condition, results of operations and cash flows of the customer. We also may rely on customer and counterparty representations
and certifications, or other auditors' reports, with respect to the business and financial condition of our existing and
potential customers and counterparties. Our financial condition, results of operations, financial reporting and reputation could
be negatively affected if we rely on materially misleading, false, incomplete, inaccurate or fraudulent information provided by
us by or on behalf of our existing or potential customers or counterparties.
Our accounting estimates and risk management processes and controls
rely on analytical and forecasting techniques and models and assumptions, which may not accurately predict future events.
Our accounting policies and methods are fundamental
to how we record and report our financial condition and results of operations. Our management must exercise judgment in selecting
and applying many of these accounting policies and methods so they comply with GAAP and reflect management's judgment of the most
appropriate manner to report our financial condition and results. In some cases, management must select the accounting policy or
method to apply from two or more alternatives, any of which may be reasonable under the circumstances, yet which may result in
our reporting materially different results than would have been reported under a different alternative.
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Certain accounting policies are critical to
presenting our financial condition and results of operations. They require management to make difficult, subjective or complex
judgments about matters that are uncertain. Materially different amounts could be reported under different conditions or using
different assumptions or estimates. These critical accounting policies include the allowance for loan losses and income taxes.
Because of the uncertainty of estimates involved in these matters, we may be required to do one or more of the following: significantly
increase the allowance for loan losses or sustain loan losses that are significantly higher than the reserve provided; reduce the
carrying value of an asset measured at fair value; or significantly increase our accrued tax liability. Any of these could have
a material adverse effect on our business, financial condition or results of operations. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations".
Our internal controls, disclosure controls,
processes and procedures, and corporate governance policies and procedures are based in part on certain assumptions and can provide
only reasonable (not absolute) assurances that the objectives of the system are met. Any failure or circumvention of our controls,
processes and procedures or failure to comply with regulations related to controls, processes and procedures could necessitate
changes in those controls, processes and procedures, which may increase our compliance costs, divert management attention from
our business or subject us to regulatory actions and increased regulatory scrutiny. Any of these could have a material adverse
effect on our business, financial condition or results of operations.
Risks Related to the Offering and an Investment
in Our Common Stock
An active, liquid trading market for our common stock may not
develop, and you may not be able to sell your common stock at or above the public offering price, or at all.
Prior to this offering, there has been no public
market for our common stock. An active trading market for shares of our common stock may never develop or be sustained following
this offering. If an active trading market does not develop, you may have difficulty selling your shares of common stock at an
attractive price, or at all. The public offering price for our common stock will be determined by negotiations between us and the
underwriter and may not be indicative of prices that will prevail in the open market following this offering. Consequently, you
may not be able to sell your common stock at or above the public offering price or at any other price or at the time that you would
like to sell. An inactive market may also impair our ability to raise capital by selling our common stock and may impair our ability
to expand our business by using our common stock as consideration in an acquisition.
The price of our common stock could be volatile
following this offering.
The market price of our common stock following
this offering may be volatile and could be subject to wide fluctuations in price in response to various factors, some of which
are beyond our control. These factors include, among other things:
·
general economic conditions and overall market fluctuations;
·
actual or anticipated fluctuations in our quarterly or annual operating results;
·
changes in accounting standards, policies, guidance, interpretations or principles;
·
the public reaction to our press releases, our other public announcements and our filings with the SEC;
·
changes in financial estimates and recommendations by securities analysts following our stock, or the failure of securities
analysts to cover our common stock after this offering;
·
changes in earnings estimates by securities analysts or our ability to meet those estimates;
·
the operating and stock price performance of other comparable companies;
·
the trading volume of our common stock;
·
new technology used, or services offered, by competitors;
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·
changes in business, legal or regulatory conditions, or other developments affecting the financial services industry, participants
in our industry, and publicity regarding our business or any of our significant customers or competitors; and
·
future sales of our common stock by us, directors, executives and significant stockholders, including the sale of our common
stock by our existing stockholders who are not subject to the lock-up agreements described in "Underwriting".
The realization of any of the risks described
in this "Risk Factors" section could have a material adverse effect on the market price of our common stock and cause
the value of your investment to decline. In addition, the stock market experiences extreme volatility that has often been unrelated
to the operating performance of particular companies. These types of broad market fluctuations may adversely affect investor confidence
and could affect the trading price of our common stock over the short, medium or long term, regardless of our actual performance.
If the market price of our common stock reaches an elevated level following this offering, it may materially and rapidly decline.
In the past, following periods of volatility in the market price of a company's securities, stockholders have often instituted
securities class action litigation. If we were to be involved in a class action lawsuit, we could incur substantial costs and it
could divert the attention of senior management and have a material adverse effect on our business, financial condition and results
of operations.
Our management will have broad discretion as to the use of proceeds
from this offering, and we may not use the proceeds effectively.
We are not required
to apply any portion of the net proceeds of this offering for any particular purpose. Accordingly, our management will have broad
discretion as to the application of the net proceeds of this offering and could use them for purposes other than those contemplated
at the time of this offering. At March 31, 2017, our total stockholders' equity was $53.2 million and our total return on
average common equity was 6.33% for the three months ended March 31, 2017.
We expect our total stockholders' equity
to be $[
·
] million upon completion of the offering, based on the midpoint of the
estimated initial public offering price range set forth on the cover page of this prospectus. A portion of the proceeds from this
offering are expected to be used to provide additional capital as a cushion against minimum regulatory capital requirements, which
may tend to reduce our return on equity as opposed to if such proceeds were used for further growth. Our stockholders may not agree
with the manner in which our management chooses to allocate and invest the net proceeds. We may not be successful in using the
net proceeds from this offering to increase our profitability or market value and we cannot predict whether the proceeds will be
invested to yield a favorable return.
The reduced disclosures and relief from certain other significant
disclosure requirements that are available to emerging growth companies may make our common stock less attractive to investors.
We are an "emerging growth company,"
as defined in the JOBS Act, and we intend to take advantage of certain exemptions from various reporting requirements that apply
to other public companies that are not "emerging growth companies." These exemptions include the following:
·
not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act;
·
less extensive disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and
·
exemptions from the requirements to hold nonbinding advisory votes
on executive compensation and stockholder approval of any golden parachute payments not previously approved.
In addition, even if we comply with the greater
obligations of public companies that are not emerging growth companies immediately after this offering, we may avail ourselves
of the reduced requirements applicable to emerging growth companies from time to time in the future, so long as we are an emerging
growth company.
We will remain an emerging growth company for
up to five years, though we may cease to be an emerging
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growth company earlier under certain circumstances, including if,
before the end of such five years, we are deemed to be a large accelerated filer under the rules of the SEC (which depends on,
among other things, having a market value of common stock held by non-affiliates in excess of $700 million). Investors and securities
analysts may find it more difficult to evaluate our common stock because we will rely on one or more of these exemptions. If, as
a result, some investors find our common stock less attractive, there may be a less active trading market for our common stock,
which could result in a reductions and greater volatility in the prices of our common stock.
The obligations associated with being a public company will require
significant resources and management attention, which may divert from our business operations.
As a result of this offering, we will become
subject to the reporting requirements of the Securities Exchange Act of 1934, or Exchange Act, and the Sarbanes-Oxley Act of 2002,
or the Sarbanes-Oxley Act. The Exchange Act requires that we file annual, quarterly and current reports with respect to our business
and financial condition with the SEC. The Sarbanes-Oxley Act requires, among other things, that we establish and maintain effective
internal controls and procedures for financial reporting. As a result, we will incur significant legal, accounting and other expenses
that we did not previously incur. We anticipate that these costs will materially increase our general and administrative expenses.
Furthermore, the need to establish the corporate infrastructure demanded of a public company may divert management's attention
from implementing our strategic plan, which could prevent us from successfully implementing our growth initiatives and improving
our business, results of operations and financial condition.
As an "emerging growth company"
as defined in the JOBS Act, we intend to take advantage of certain temporary exemptions from various reporting requirements, including
reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and an exemption from
the requirement to obtain an attestation from our auditors on management's assessment of our internal control over financial reporting.
When these exemptions cease to apply, we expect to incur additional expenses and devote increased management effort toward ensuring
compliance with them. We cannot predict or estimate the amount of additional costs we may incur as a result of becoming a public
company or the timing of such costs.
You will incur immediate dilution as a result of this offering.
If you purchase
our common stock in this offering, you will pay more for your shares than the net tangible book value per share immediately following
consummation of this offering. As a result, you will incur immediate dilution of $
[
·
]
per share representing the difference between the offering price of $
[
·
]
,
the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus, and our adjusted
net tangible book value per share as of
March 31, 2017
of $
[
·
]
per share of common stock. This represents
[
·
]
%
dilution from the midpoint of the initial public offering price set forth on the cover page of this prospectus. Accordingly, if
we were to be liquidated at our book value immediately following this offering, you would not receive the full amount of your investment.
We have not historically declared or paid cash dividends on our
common stock and we do not expect to pay dividends on our common stock in the foreseeable future. Consequently, your only opportunity
to achieve a return on your investment in the foreseeable future is if the price of our common stock appreciates.
The holders of our common stock will receive
dividends if and when declared by our board of directors out of legally available funds. Our board of directors has not declared
a dividend on our common stock since our inception. Any future determination relating to our dividend policy will be made at the
discretion of our board of directors and will depend on a number of factors, including our future earnings, capital requirements,
financial condition, future prospects, regulatory restrictions, and other factors that our board of directors may deem relevant.
Our principal business operations are conducted
through our subsidiary, Esquire Bank. Cash available to pay dividends to our stockholders is derived primarily, if not entirely,
from dividends paid by Esquire Bank to us. The ability of Esquire Bank to pay dividends to us, as well as our ability to pay dividends
to our stockholders, will continue to be subject to, and limited by, certain legal and regulatory restrictions. Further, any lenders
making loans to us may impose financial covenants that may be more restrictive with respect to dividend payments than the regulatory
requirements.
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If equity research analysts do not publish research or reports
about our business, or if they do publish such reports but issue unfavorable commentary or downgrade our common stock, the price
and trading volume of our common stock could decline.
The trading market for our common stock could
be affected by whether equity research analysts publish research or reports about us and our business. We cannot predict at this
time whether any research analysts will publish research and reports on us and our common stock. If one or more equity analysts
do cover us and our common stock and publish research reports about us, the price of our stock could decline if one or more securities
analysts downgrade our stock or if those analysts issue other unfavorable commentary or cease publishing reports about us or our
business.
If any of the analysts who elect to cover us
downgrades our stock, our stock price could decline rapidly. If any of these analysts ceases coverage of us, we could lose visibility
in the market, which in turn could cause our common stock price or trading volume to decline and our common stock to be less liquid.
If a substantial number of shares become available for sale and
are sold in a short period of time, the market price of our common stock could decline.
If our existing
stockholders sell substantial amounts of our common stock in the public market following this offering, the market price of our
common stock could decrease significantly. The perception in the public market that our existing stockholders might sell shares
of common stock could also depress our market price. Upon completion of this offering, we will have
[
·
]
shares of our common stock outstanding, or
[
·
]
shares if the underwriter exercises in full its option to purchase additional shares. Our directors,
executive officers, the selling stockholders and certain additional other holders of our common stock, collectively representing
[
·
]
% of our common shares outstanding upon
completion of this offering, or
[
·
]
% if
the underwriter exercises in full its option to purchase additional shares, will be subject to the lock-up agreements described
in "Underwriting" and the Rule 144 holding period requirements described in "Shares Eligible for Future Sale."
After all of the lock-up periods have expired and the holding periods have elapsed,
[
·
]
additional shares of our outstanding common stock will be eligible for sale in the public market.
In addition, the underwriter may, at any time and without notice, release all or a portion of the shares subject to lock-up agreements.
The market price of shares of our common stock may drop significantly when the restrictions on resale by our existing stockholders
lapse. A decline in the price of shares of our common stock might impede our ability to raise capital through the issuance of additional
shares of our common stock or other equity securities and could result in a decline in the value of the shares of our common stock
purchased in this offering.
In addition,
one of our stockholders, CJA Private Equity Financial Restructuring Master Fund I, LP, has piggyback registration rights pursuant
to a registration rights agreement with respect to the shares of our common stock and shares of our
Series B Preferred Stock
that it owns. As of the date of this prospectus, CJA Private Equity Financial Restructuring Master Fund I, LP owned 497,815 shares
of our common stock, and 66,985 shares of our
Series B Preferred Stock.
Following
our initial public offering, to the extent the holder of our Series B Preferred Shares remains a holder of our common stock or
our Series B Preferred Shares, it may exercise its "piggyback" registration rights in connection with future offerings
of our common stock, other than registration statements filed on Forms S-4 or S-8.
Our directors and executive officers beneficially own a significant
portion of our common stock and have substantial influence over us.
Our directors
and executive officers, as a group, beneficially owned approximately
28.2
% of our outstanding
common stock as of
May 23, 2017
. As a result of this level of ownership, our directors and
executive officers have the ability, by taking coordinated action, to exercise significant influence over our affairs and policies.
The interests of our directors and executive officers may not be consistent with your interests as a stockholder. This influence
may also have the effect of delaying or preventing changes of control or changes in management, or limiting the ability of our
other stockholders to approve transactions that they may deem to be in the best interests of our Company.
A future issuance of stock could dilute the value of our common
stock.
We may sell
additional shares of common stock, or securities convertible into or exchangeable for such shares, in subsequent public or private
offerings. Upon completion of this offering, there will be
[
·
]
shares
of our
30
Table of Contents
common stock issued and outstanding,
or [
·
] shares if the underwriter exercises in full its option to purchase additional
shares. Those shares outstanding do not include the potential issuance, as of
March 31, 2017
,
of
1,013,045
shares of our common stock subject to issuance upon exercise of outstanding
stock options under our 2007 Stock Option Plan and our 2011
Stock Compensation Plan
,
11,562
additional shares of our common stock that were reserved for issuance under our
plans
at
March 31, 2017 or
66,985 shares of Series B Preferred Stock that are not convertible
by the holder, but are convertible on a one for one basis into shares of our common stock under certain circumstances.
Future
issuance of any new shares could cause further dilution in the value of our outstanding shares of common stock. We cannot predict
the size of future issuances of our common stock, or securities convertible into or exchangeable for such shares, or the effect,
if any, that future issuances and sales of shares of our common stock will have on the market price of our common stock. Sales
of substantial amounts of our common stock (including shares issued in connection with an acquisition), or the perception that
such sales could occur, may adversely affect prevailing market prices of our common stock.
Our common stock is subordinate to our existing and future indebtedness
and preferred stock.
Shares of our common stock are equity interests
and do not constitute indebtedness. As such, our common stock ranks junior to all our customer deposits and indebtedness, and other
non-equity claims on us, with respect to assets available to satisfy claims. Additionally, holders of common stock are subject
to the prior liquidation rights of the holders of our Series B Preferred Stock and may be subject to the prior dividend and liquidation
rights of other series of preferred stock we may issue in the future.
Provisions in our charter documents, Maryland law and federal
law may have an anti-takeover effect, and there are substantial regulatory limitations on changes of control of bank holding companies.
Provisions of our charter documents, the Maryland
General Corporation Law, or the MGCL, and federal banking law could make it more difficult for a third party to acquire us, even
if doing so would be perceived to be beneficial by our stockholders. These provisions include:
·
staggered terms for directors, who may be removed from office only for cause;
·
a provision establishing certain advance notice procedures for nomination of candidates for election as directors and for stockholder
proposals;
·
a provision that any special meeting of our stockholders may be called only by a majority of the board of directors, the President
or a holder or group of holders of at least 50% of our shares entitled to vote at the meeting; and
·
the ability for our board of directors, without stockholder approval, to increase or decrease the number of authorized shares
without stockholder approval and the ability for our board of directors to issue our preferred stock and to determine the terms
of such preferred stock.
Furthermore, with certain limited exceptions,
federal regulations prohibit a person or company or a group of persons deemed to be "acting in concert" from, directly
or indirectly, acquiring more than 10% (5% if the acquirer is a bank holding company) of any class of our voting stock or obtaining
the ability to control in any manner the election of a majority of our directors or otherwise direct the management or policies
of our company without prior notice or application to and the approval of the Federal Reserve. Accordingly, prospective investors
need to be aware of and comply with these requirements, if applicable, in connection with any purchase of shares of our common
stock. Moreover, the combination of these provisions effectively inhibits certain mergers or other business combinations, which,
in turn, could adversely affect the market price of our common stock.
An investment in our common stock is not an insured deposit and
is not guaranteed by the FDIC, so you could lose some or all of your investment.
An investment in our common stock is not
a bank deposit and, therefore, is not insured against loss or guaranteed by the FDIC, any other deposit insurance fund or by
any other public or private entity. An investment in our common stock is inherently risky for the reasons described herein.
As a result, if you acquire our common stock, you could lose some or all of your investment.
31
Table of Contents
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This prospectus contains forward-looking statements
within the meaning of the federal securities laws. These forward-looking statements reflect our current views with respect to,
among other things, future events and our financial performance. These statements are often, but not always, made through the use
of words or phrases such as "may," "might," "should," "could," "predict,"
"potential," "believe," "expect," "attribute," "continue," "will,"
"anticipate," "seek," "estimate," "intend," "plan," "projection,"
"goal," "target," "outlook," "aim," "would," "annualized"
and "outlook," or the negative version of those words or other comparable words or phrases of a future or forward-looking
nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections
about our industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently
uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future
performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although we believe
that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove
to be materially different from the results expressed or implied by the forward-looking statements.
The following
factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed
in the forward-looking statements:
·
our ability to manage our operations under the current economic conditions
nationally and in our market area;
·
adverse changes in the financial industry, securities, credit and
national local real estate markets (including real estate values);
·
risks related to a high concentration of loans secured by real estate
located in our market area;
·
risks related to a high concentration of loans and deposits dependent
upon the legal and "litigation" market;
·
the impact of any potential strategic transactions;
·
our ability to enter new markets successfully and capitalize on growth
opportunities;
·
significant increases in our loan losses, including as a result of
our inability to resolve classified and non-performing assets or reduce risks associated with our loans, and management's
assumptions in determining the adequacy of the allowance for loan losses;
·
interest rate fluctuations, which could have an adverse effect on
our profitability;
·
external
                                         economic and/or market factors, such as changes in monetary and fiscal policies and laws,
                                         including the interest rate policies of the FRB, inflation or deflation, changes in the
                                         demand for loans, and fluctuations in consumer spending, borrowing and savings habits,
                                         which may have an adverse impact on our financial condition;
·
continued or increasing competition from other financial institutions,
credit unions, and non-bank financial services companies, many of which are subject to different regulations than we are;
·
credit risks of lending activities, including changes in the level
and trend of loan delinquencies and write-offs and in our allowance for loan losses and provision for loan losses;
·
our success in increasing our legal and "litigation" market
lending;
·
our ability to attract and maintain deposits and our success in introducing
new financial products;
32
Table of Contents
·
losses suffered by merchants or ISOs with whom we do business;
·
our ability to effectively manage risks related to our merchant services
business;
·
our ability to leverage the professional and personal relationships
of our board members and advisory board members;
·
changes in interest rates generally, including changes in the relative
differences between short-term and long-term interest rates and in deposit interest rates, that may affect our net interest margin
and funding sources;
·
fluctuations in the demand for loans;
·
technological changes that may be more difficult or expensive than
expected;
·
changes in consumer spending, borrowing and savings habits;
·
declines in the yield on our assets resulting from the current low
interest rate environment;
·
declines in our merchant processing income as a result of reduced
demand, competition and changes in laws or government regulations or policies affecting financial institutions, including the Dodd-Frank
Act and the JOBS Act, which could result in, among other things, increased deposit insurance premiums and assessments, capital
requirements, regulatory fees and compliance costs, particularly the new capital regulations, and the resources we have available
to address such changes;
·
changes in accounting policies and practices, as may be adopted by
the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company
Accounting Oversight Board;
·
loan delinquencies and changes in the underlying cash flows of our
borrowers;
·
the impairment of our investment securities;
·
our ability to control costs and expenses, particularly those associated
with operating as a publicly traded company;
·
the failure or security breaches of computer systems on which we depend;
·
political instability;
·
acts of war or terrorism;
·
competition and innovation with respect to financial products and
services by banks, financial institutions and non-traditional providers, including retail businesses and technology companies;
·
changes in our organization and management and our ability to retain
or expand our management team and our board of directors, as necessary;
·
the costs and effects of legal, compliance and regulatory actions,
changes and developments, including the initiation and resolution of legal proceedings, regulatory or other governmental inquiries
or investigations, and/or the results of regulatory examinations and reviews;
33
Table of Contents
·
the ability of key third-party service providers to perform their
obligations to us; and
·
other economic, competitive, governmental, regulatory and operational
factors affecting our operations, pricing, products and services described elsewhere in this prospectus.
The foregoing factors should not be construed
as exhaustive and should be read in conjunction with other cautionary statements that are included in this prospectus. If one or
more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect,
actual results may differ materially from what we anticipate. Accordingly, you should not place undue reliance on any such forward-looking
statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation
to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.
New risks and uncertainties arise from time to time, and it is not possible for us to predict those events or how they may affect
us. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in any forward-looking statements.
34
Table of Contents
USE OF PROCEEDS
Assuming a public offering price of $[
·
]
per share, we estimate that the net proceeds from the sale of the shares of common stock by us will be approximately $[
·
]
million (or approximately $[
·
] million if the underwriter exercises in full its
option to purchase additional shares of common stock from us), after deducting the estimated underwriting discounts and commissions
and estimated offering expenses payable by us. Each $1.00 increase (decrease) in the per share public offering price would increase
(decrease) the net proceeds to us of this offering by approximately $[
·
] million
(or approximately $[
·
] million if the underwriter elects to exercise its purchase
option in full), after deducting estimated underwriting discounts and offering expenses.
In order to
maintain
our capital and liquidity ratios at acceptable levels while we continue to
grow our balance sheet with commercial real estate loans and commercial loans, we have decided to undertake a public offering at
this time. Additionally, o
ur lending limit is expected to increase by $[
·
]
million following the completion of this offering, which will allow us to originate larger loans and be more competitive in the
market place.
We intend to
use the net proceeds of the offering to support the growth in Esquire Bank's loan portfolio, including the possibility of
making larger loans due to our increased legal lending limit, to finance potential strategic acquisitions
to
the extent such opportunities arise
and for other general corporate purposes, which could
include other growth initiatives. We have no current plans, arrangements or understandings relating to any specific acquisition
or similar transaction and management has not yet determined the types of businesses that they might target.
Our management will retain broad discretion
to allocate the net proceeds of this offering, and the precise amounts and timing of our use of the net proceeds of this offering
will depend upon market conditions, as well as other factors. Until we deploy the proceeds of this offering for the uses described
above, we expect to hold such proceeds in short-term investments.
We will not receive any proceeds from the sale
of shares of our common stock by the selling stockholders.
35
Table of Contents
CAPITALIZATION
The following
table shows our capitalization, including regulatory capital ratios, on a consolidated basis, as of
March 31, 2017
:
·
on an actual basis; and
·
on a pro forma basis to give effect to (i) the issuance and sale by us of [
·
]
shares of common stock in this offering (assuming the underwriter does not exercise its option to purchase any additional shares
to cover
over-allotments,
if any), and the receipt and
application of the net proceeds from the sale of these shares at an initial public offering price of $[
·
]
per share and (ii) the sale by the selling stockholders of [
·
] shares of common
stock in this offering, after deducting underwriting discounts and commissions and the estimated offering expenses payable by us.
You should read this table in conjunction with
"Use of Proceeds," "Selected Historical Consolidated Financial Data," "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related
notes included elsewhere in this prospectus.
At March 31, 2017
Actual
As
Adjusted
(dollars in thousands
except per share data)
(unaudited)
Stockholders' equity:
Preferred Stock, par value $0.01 per share; authorized—2,000,000 shares; issued and outstanding—66,985 shares
$
1
$
Common stock, par value $0.01 per share; authorized—15,000,000 shares; issued and outstanding—5,003,030 shares
50
Capital surplus
58,983
Retained deficit
(5,011
)
Accumulated other comprehensive income, net
(779
)
Total stockholders' equity
$
53,244
$
Total capitalization
$
53,244
$
Capital ratios (Esquire Bank):
Tier 1 capital to average assets for leverage
11.60
%
%
Tier 1 capital to risk-weighted assets
15.46
%
%
Total capital to risk-weighted assets
16.59
%
%
Common equity tier 1 capital to risk-weighted assets
15.46
%
%
Tangible common equity to tangible assets(1)
11.99
%
%
Per share data
Book value per common share(2)
$
10.50
$
Tangible book value per common share(3)
$
10.50
$
(1)
Tangible common equity to tangible assets is a ratio of the Company. The Company had no intangible assets as of the dates indicated.
Thus, tangible common equity to tangible assets is the same as
total common stockholders'
equity to total assets.
(2)
Excludes 66,985 shares of our common stock issuable under certain circumstances upon conversion by us, not the holder, of the
Series B Preferred Stock.
(3)
The Company had no intangible assets as of the dates indicated. Thus, tangible book value per common share is the same as book
value per common share for each of the periods indicated.
36
Table of Contents
DILUTION
If you invest in our common stock, your ownership
interest will be immediately diluted to the extent of the difference between the initial public offering price per share of our
common stock in this offering and the net tangible book value per share of common stock upon completion of this offering.
Net tangible
book value per common share represents the amount of our total tangible assets less total liabilities and preferred stock, divided
by the number of shares of common stock outstanding. Our net tangible book value as of
March 31
,
2017 was $52.5 million, or $10.50 per share of common stock, based upon 5,003,030 shares of common stock outstanding as of such
date.
After giving
effect to the sale of [
·
] shares of our common stock by us at the initial public
offering price of $[
·
] per share, the midpoint of the estimated initial public
offering price range set forth on the cover page of this prospectus, and after deducting the estimated underwriting discounts and
commissions and estimated offering expenses payable by us, our net tangible book value as of
March 31
,
2017 would have been approximately $[
·
] million, or approximately $[
·
]
per share of common stock. This represents an immediate [
·
] in net tangible book
value of $[
·
] per share to existing common stockholders, and an immediate dilution
of $[
·
] per share to investors participating in this offering. If the initial public
offering price is higher or lower, the dilution to new stockholders will be greater or less, respectively.
The following table illustrates this dilution
on a per share basis:
Assumed initial public offering price per
    share
$
[·]
Net tangible book value per share at
    March 31, 2017
$
10.50
Increase
    in net tangible book value per share attributable to this offering
[·]
As adjusted tangible
    book value per share after this offering
[·]
Dilution in net
    tangible book value per share to new investors
$
[·]
A $1.00 increase (or decrease) in the assumed
initial public offering price of $[
·
] per share, which is the midpoint of the estimated
initial public offering price range set forth on the cover page of this prospectus, would increase (or decrease) the as adjusted
net tangible book value per common share after this offering by approximately $[
·
],
and dilution in net tangible book value per common share to new investors by approximately $[
·
],
assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after
deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriter exercises
in full its option to purchase additional shares of our common stock in this offering, the as adjusted net tangible book value
after this offering would be $[
·
] per share, the increase in net tangible book
value to existing stockholders would be $[
·
] per share and the dilution to new
investors would be $[
·
] per share, in each case assuming an initial public offering
price of $[
·
] per share, which is the midpoint of the estimated initial public
offering price range set forth on the cover page of this prospectus.
The following
table summarizes, as of
March 31
, 2017, the differences between our existing stockholders
and new investors with respect to the number of shares of our common stock purchased from us, the total consideration paid and
the average price per share paid. The calculations with respect to shares purchased by new
investors
in this offering reflect an assumed offering price of $
[
·
]
per share, which is the midpoint of the estimated initial public offering price range
set forth on the cover page of this prospectus, before deducting estimated underwriting discounts and commissions and estimated
offering expenses payable by us:
Shares
    Purchased
Total
    Consideration
Average
    Price
Number
Percentage
Amount
Percentage
Per
    Share
Existing stockholders as of  March 31, 2017
%
$
%
$
New Investors
%
%
Total
%
$
%
$
37
Table of Contents
If the
underwriter exercises its option to purchase additional shares in full, then our pro forma net tangible book value per share of
our common stock as of
March 31
, 2017
, would
be approximately $
[
·
]
million,
or $
[
·
]
per
share, representing an immediate increase in net tangible book value to our existing stockholders of approximately $
[
·
]
per share and immediate dilution in net tangible book value to investors purchasing shares in this offering of approximately $
[
·
]
per share.
The table
above excludes (i)
1,013,045 shares of common stock issuable upon the exercise of outstanding stock options at a weighted
average exercise price of $12.14 per share (333,315 shares of which are currently exercisable) as of March 31, 2017; (ii) 11,562
shares of our common stock reserved for issuance in connection with restricted stock awards, restricted stock unit awards, and
stock options available for issuance under our 2007 Stock Option Plan and our 2011 Stock Compensation Plan as of March 31, 2017;
and (iii) 66,985 shares of our common stock issuable under certain circumstances upon conversion by us, not the holder, of the
Series B Preferred Stock.
In connection with the exercise of any of these stock options or
if other equity awards are issued under our
2007 Stock Option Plan and
2011 Stock
Compensation Plan, or if the 66,985 shares of common stock were issued upon conversion of the
Series B Preferred Stock,
investors purchasing in this offering will experience further dilution.
38
Table of Contents
DIVIDEND POLICY
We have
not historically declared or paid cash dividends on our common stock and we do not expect to pay cash dividends on our common stock
for the foreseeable future. Instead, we anticipate that all of our future earnings will be retained to support our operations and
to finance the growth and development of our business. Any future determination to pay cash dividends on our common stock will
be made by our board of directors and will depend on a number of factors, including
·
our historical and projected financial condition, liquidity and results of operations;
·
our capital levels and requirements;
·
statutory and regulatory prohibitions and other limitations;
·
any contractual restriction on our ability to pay cash dividends, including pursuant
to the terms of any of our credit agreements or other borrowing arrangements;
·
our business strategy;
·
tax considerations;
·
any acquisitions or potential acquisitions that we may examine;
·
general economic conditions; and
·
other factors deemed relevant by our board of directors.
As a Maryland
corporation, we are subject to certain restrictions on dividends under the Maryland General Corporation Code. Generally, Maryland
law limits cash dividends if the corporation would not be able to pay its debts in the usual course of business after giving effect
to the cash dividend or if the corporation's total assets would be less than the corporation's total liabilities plus
the amount needed to satisfy the preferential rights upon dissolution of stockholders whose preferential rights on dissolution
are superior to those receiving the distribution. We are also subject to certain restrictions on the payment of cash dividends
as a result of banking laws, regulations and policies. See "Supervision and Regulation – Esquire Bank, National Association
– Safety and Soundness Standards."
Because
we are a holding company, we are dependent upon the payment of dividends by Esquire Bank to us as our principal source of funds
to pay dividends in the future, if any, and to make other payments. Esquire Bank is also subject to various legal, regulatory and
other restrictions on its ability to pay dividends and make other distributions and payments to us.
A national bank may
generally declare a cash dividend, without approval from the OCC, in an amount equal to its year-to-date net income plus the prior
two years' net income that is still available for dividends. The OCC has the authority to prohibit a national bank from paying
cash dividends if such payment is deemed to be an unsafe or unsound practice. In addition, as a depository institution the deposits
of which are insured by the FDIC, Esquire Bank may not pay cash dividends or distribute any of its capital assets while it remains
in default on any assessment due to the FDIC. Esquire Bank currently is not (and never has been) in default under any of its obligations
to the FDIC.
See "Supervision and Regulation—Esquire Bank, National Association—Dividends."
The FRB has issued a policy statement regarding
the payment of cash dividends by bank holding companies. In general, the FRB's policy provides that cash dividends should
be paid only out of current earnings and only if the prospective rate of earnings retention by the bank holding company appears
consistent with the organization's capital needs, asset quality and overall financial condition. The FRB has the authority
to prohibit a bank holding company from paying cash dividends if such payment is deemed to be an unsafe or unsound practice.
39
Table of Contents
SELECTED HISTORICAL CONSOLIDATED FINANCIAL
DATA
The following
table sets forth selected historical consolidated financial data as of the dates and for the periods shown. The selected balance
sheet data as of December 31, 2016 and 2015 and the selected income statement data for the years then ended have been derived
from our audited consolidated financial statements included elsewhere in this prospectus. The selected balance sheet data as of
December 31, 2014 and the selected income statement data for the year then ended have been derived from our audited consolidated
financial statements that are not included in this prospectus.
The selected historical consolidated financial data
as of March 31, 2017 and for the three months ended March 31, 2017 and 2016 is derived from our unaudited interim condensed
consolidated financial statements included elsewhere in this prospectus and includes all normal and recurring adjustments that
we consider necessary for a fair presentation. The selected historical consolidated balance sheet data as of March 31, 2016
is derived from our unaudited interim condensed consolidated financial statements that are not included in this prospectus and
have not been subject to review procedures from our independent accountants. Operating results for the three months ended
March 31, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.
The
information should be read in conjunction with "Risk Factors," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and our consolidated financial statements and the related notes included
elsewhere in the prospectus.
At or For the Three Months
Ended March 31,
At or For the Years Ended December 31,
2017
2016
2016
2015
2014
(Dollars in thousands, except
    share and per share data)
Balance Sheet Data:
Total assets
$
438,059
$
351,500
$
424,833
$
352,650
$
330,690
Cash and cash equivalents
32,586
25,069
42,993
33,154
71,891
Securities available-for-sale
103,652
79,200
92,645
84,239
70,925
Loans receivable, net
287,033
233,294
275,165
221,720
170,512
Restricted stock
1,746
1,487
1,649
1,430
237
Deposits
383,372
298,693
370,788
301,687
290,774
Secured borrowings
284
378
371
381
391
Total stockholders' equity
53,244
51,170
52,186
49,425
38,542
Income Statement Data:
Interest income
$
4,432
$
3,733
$
16,168
$
12,451
$
10,714
Interest expense
137
101
511
457
466
Net interest income
4,295
3,632
15,657
11,994
10,248
Provision for loan losses
150
145
595
930
300
Net interest income after provision for loan losses
4,145
3,487
15,062
11,064
9,948
Noninterest income
1,204
987
4,125
2,943
1,765
Noninterest expense
4,024
3,420
14,599
12,171
11,262
Income before income tax expense
1,325
1,054
4,588
1,836
451
Income tax expense
510
411
1,766
664
410
Net income
815
643
2,822
1,172
41
Less: Preferred stock dividends
—
—
—
—
—
Net income available to common stockholders
$
815
$
643
$
2,822
$
1,172
$
41
Per Share Data:
Earnings per common share:
Basic
$
0.16
$
0.13
$
0.56
$
0.25
$
0.01
Diluted
$
0.16
$
0.13
$
0.55
$
0.25
$
0.01
Book value per common share(1)
$
10.50
$
10.07
$
10.29
$
9.72
$
8.98
Tangible book value per common share(2)
$
10.50
$
10.07
$
10.29
$
9.72
$
8.98
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Table of Contents
As of and for the Three
Months Ended March 31,
As of and for the Years Ended December 31,
2017
2016
2016
2015
2014
Selected Performance Ratios:
Return on average assets
0.79
%
0.74
%
0.74
%
0.36
%
0.01
%
Return on average common equity
6.33
%
5.32
%
5.48
%
2.77
%
0.13
%
Interest rate spread
4.14
%
4.18
%
4.15
%
3.64
%
3.76
%
Net interest margin
4.23
%
4.27
%
4.25
%
3.74
%
3.86
%
Efficiency ratio, adjusted(3)
73.18
%
74.14
%
73.82
%
81.48
%
94.94
%
Average interest earning assets to average Interest bearing liabilities
171.91
%
174.21
%
167.13
%
170.76
%
154.28
%
Average equity to average assets
12.58
%
14.30
%
13.83
%
13.38
%
11.31
%
Asset Quality Ratios:
Allowance for loan losses to total loans
1.21
%
1.26
%
1.23
%
1.25
%
1.25
%
Allowance for loan losses to nonperforming loans(4)
N/A
N/A
N/A
N/A
N/A
Net charge-offs (recoveries) to average outstanding loans
0.01
%
(0.01
)%
(0.01
)%
0.16
%
0.00
%
Nonperforming loans to total loans(4)
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
Nonperforming loans to total assets(4)
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
Nonperforming assets to total assets(5)
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
Capital Ratios (Esquire Bank):
Total capital to risk weighted assets
16.59
%
16.84
%
17.25
%
17.06
%
18.54
%
Tier 1 capital to risk weighted assets
15.46
%
15.68
%
16.09
%
15.91
%
17.40
%
Tier 1 common equity to risk weighted assets(6)
15.46
%
15.68
%
16.09
%
15.91
%
N/A
Leverage capital ratio
11.60
%
11.63
%
11.63
%
11.90
%
10.06
%
Other:
Number of offices
3
3
3
3
3
Number of full-time equivalent employees
50
43
52
43
42
(1)
For purposes of computing book value per common share, book value equals total common stockholders' equity. Total common
stockholders' equity equals total stockholders' equity, less preferred equity. Preferred equity was $720 and $1,697
at March 31, 2017 and 2016, respectively, and $720, $1,697 and $1,842 at December 31, 2016, 2015 and 2014, respectively.
(2)
The Company had no intangible assets as of the dates indicated. Thus, tangible book value per common share is the same as book
value per common share for each of the periods indicated.
(3)
Efficiency ratio represents noninterest expenses, divided by the sum of net interest income plus noninterest income. With respect
to the efficiency ratio, adjusted, noninterest income excludes gains or losses on sale of investment securities. This is a non-GAAP
financial measure. See "Non-GAAP Financial Measure Reconciliation" below for a reconciliation of this measure to its
most comparable GAAP measure.
(4)
Nonperforming loans include nonaccrual loans, loans past due 90 days and still accruing interest and loans modified under troubled
debt restructurings.
(5)
Nonperforming assets include nonperforming loans, other real
estate owned and other foreclosed assets.
(6)
Tier 1 common equity to
risk-weighted assets ratio is required under the Basel III Final Rules which became effective for Esquire Bank on January 1, 2015.
Accordingly, this ratio is shown as not applicable ("N/A") for periods prior to January 1, 2015.
Non-GAAP Financial Measure Reconciliation
A financial measure included in our selected
historical consolidated financial data and elsewhere in this prospectus is not a measure of financial performance recognized by
GAAP. This non-GAAP financial measure is the "efficiency ratio." Our management uses this non-GAAP financial measures
in its analysis of our performance.
The efficiency ratio is a non-GAAP measure of
expense control relative to adjusted revenue. We calculate the efficiency ratio by dividing total noninterest expenses, as determined
under GAAP, by the sum of total net interest income and total noninterest income, each as determined under GAAP, but excluding
net gains on securities and other non-recurring income sources, if applicable, from this calculation, which we refer to below as
adjusted revenue. We believe that this provides one a reasonable measure of core expenses relative to core revenue.
41
Table of Contents
We believe that this non-GAAP financial measure
provides information that is important to investors and that is useful in understanding our financial position, results and ratios.
However, this non-GAAP financial measure is supplemental and is not a substitute for an analysis based on GAAP measures. As other
companies may use different calculations for this measure, this presentation may not be comparable to other similarly titled measures
by other companies.
At
    March 31,
At
    December 31,
2017
2016
2016
2015
2014
(Dollars in thousands)
Efficiency Ratio:
Net interest income
$
4,295
$
3,632
$
15,657
$
11,994
$
10,247
Noninterest income
1,204
987
4,125
2,943
1,766
Less: Net gains on sales of securities
—
6
6
—
151
Adjusted revenue
$
5,499
$
4,613
$
19,776
$
14,937
$
11,862
Total noninterest expense
4,024
3,420
14,599
12,171
11,262
Efficiency ratio
73.18
%
74.14
%
73.82
%
81.48
%
94.94
%
42
Table of Contents
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The
following discussion and analysis of our financial condition and results of operations for the three months ended March 31, 2017
and 2016 and for the years ended December 31, 2016, 2015 and 2014 should be read in conjunction with "Selected Historical
Consolidated Financial Data" and our consolidated financial statements and the accompanying notes included elsewhere in
this prospectus. This discussion and analysis contains forward-looking statements that are subject to certain risks and uncertainties
and are based on certain assumptions that we believe are reasonable but may prove to be inaccurate. Certain risks, uncertainties
and other factors, including those set forth under "Cautionary Note Regarding Forward-Looking Statements," "Risk
Factors" and elsewhere in this prospectus, may cause actual results to differ materially from those projected results discussed
in the forward-looking statements appearing in this discussion and analysis. We assume no obligation to update any of these forward-looking
statements.
Overview
Our profitability is highly dependent on our
net interest income, which is the difference between our interest income on interest earning assets, such as loans and securities,
and our interest expense on interest bearing liabilities, such as deposits and borrowed funds. Additionally, we also obtain a significant
portion of noninterest income through our merchant services business.
Our net income increased $172,000, or 26.8%,
to $815,000 for the three months ended March 31, 2017 from $643,000 for the three months ended March 31, 2016. The increase was
due to an increase in net interest income and customer related fees and service charges. The increase in net interest income was
caused by an increase in interest and fees on loans, which increased $602,000, or 18.7%, to $3.8 million for the three months ended
March 31, 2017 from $3.2 million for the three months ended March 31, 2016. This increase was due to continued growth in our loan
portfolio.
Noninterest income increased $217,000, or 22.0%,
to $1.2 million for the three months ended March 31, 2017 from $987,000 for the three months ended March 31, 2016. The increase
in noninterest income was primarily from growth in customer related fees and service charges. Customer related fees and service
charges increased $138,000 or 60.5% to $366,000 for the three months ended March 31, 2017 from $228,000 for the three months ended
March 31, 2016. Merchant processing income increased by $85,000 or 11.3% to $838,000 for the three months ended March 31, 2017
from $753,000 for the three months ended March 31, 2016.
Our provision for loan losses was $150,000 for
the three months ended March 31, 2017 compared to $145,000 for the three months ended March 31, 2016. The higher provision for
loan loss was a result of the continued growth in our loan portfolio.
Our net income increased $1.7 million, or 140.8%,
to $2.8 million for the year ended December 31, 2016 from $1.2 million for the year ended December 31, 2015. The increase was due
to an increase in net interest income and merchant processing income. The increase in net interest income was caused by an increase
in interest and fees on loans, which increased $3.5 million, or 32.8%, to $14.1 million for the year ended December 31, 2016 from
$10.6 million for the year ended December 31, 2015. This increase was due to continued success in growing our loans.
Noninterest income increased $1.2 million, or
40.2%, to $4.1 million for the year ended December 31, 2016 from $2.9 million for the year ended December 31, 2015. The increase
in noninterest income was primarily from growth in our merchant services business. Merchant processing income increased by $737,000
or 33.5% to $2.9 million for the year ended December 31, 2016 from $2.2 million for the year ended December 31, 2015. Customer
related fees and service charges also increased $439,000 or 59.2% to $1.2 million for the year ended December 31, 2016 from $741,000
for the year ended December 31, 2015.
Our provision for loan losses was $595,000 for
the year ended December 31, 2016 compared to $930,000 for the year ended December 31, 2015. The provision recorded resulted in
an allowance for loan losses of $3.4 million, or 1.23% of total loans at December 31, 2016, compared to $2.8 million, or 1.25%
of total loans at December 31, 2015. The decrease in the allowance for loan losses as a percentage of loans resulted primarily
from changes in our loan portfolio composition.
Our net income increased $1.1 million to
$1.2 million for the year ended December 31, 2015 from $41,000 for the year ended December 31, 2014. The increase was due to an
increase in net interest income and merchant processing income, partially offset by a decrease in gain on sales of securities
and an increase in the provision for loan losses. The increase in net interest income was caused by an increase in interest and
fees on loans, which increased $1.7 million, or 19.2%, to $10.6 million for the year ended December 31, 2015 from $8.9 million
for the year ended December 31, 2014. This increase was due to our continued success in growing 1-4 family residential, multifamily,
commercial real estate loans, construction, commercial loans and consumer loans.
Noninterest income increased $1.2 million,
or 66.7%, to $2.9 million for the year ended December 31, 2015 from $1.8 million for the year ended December 31, 2014. The increase
in noninterest income was primarily from growth in our merchant services business. Merchant processing income increased by $1.1
million or 92.7% to $2.2 million for the year ended December 31, 2015 from $1.1 million for the year ended December 31, 2014.
Gains on sales of securities decreased $151,000 for the year ended December 31, 2015 from the year ended December 31, 2014. We
did not sell any securities during the year ended December 31, 2015.
Our provision for loan losses was $930,000
for the year ended December 31, 2015 compared to $300,000 for the year ended December 31, 2014. The higher provision for loan
loss was a result of the growth in the loan portfolio and related impact to the allowance for loan losses.
43
Table of Contents
Critical Accounting Policies
A summary of our accounting policies is described
in Note 1 to both the consolidated financial statements and the interim condensed consolidated financial statements
included in this prospectus. Critical accounting estimates are necessary in the application of certain accounting policies
and procedures and are particularly susceptible to significant change. Critical accounting policies are defined as those involving
significant judgments and assumptions by management that could have a material impact on the carrying value of certain assets
or on income under different assumptions or conditions. Management believes that the most critical accounting policies, which
involve the most complex or subjective decisions or assessments, are as follows:
Allowance for Loan Losses.
The
allowance for loan losses is a valuation allowance for probable incurred credit losses. The allowance for loan losses is increased
by provisions for loan losses charged to income. Losses are charged to the allowance when all or a portion of a loan is deemed
to be uncollectible. Subsequent recoveries of loans previously charged off are credited to the allowance for loan losses when realized.
Management estimates the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information
about specific borrower situations and estimated collateral values, economic conditions and other factors. Allocations of the allowance
may be made for specific loans, but the entire allowance is available for any loan that, in management's judgment, should
be charged off.
The allowance consists of specific and general
components. The specific component relates to loans that are individually classified as impaired when, based on current information
and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement.
Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties,
are considered troubled debt restructurings and classified as impaired.
Factors considered by management in determining
impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments
when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management
determines the significance of payment delays and payment shortfalls on case-by-case basis, taking into consideration all of the
circumstances surrounding the loan and the borrower, including the length of the delay, the reason for the delay, the borrower's
prior payment record, and the amount of the shortfall in relation to the principal and interest owed.
All loans, except for consumer loans, are individually
evaluated for impairment. If a loan is impaired, a portion of the allowance is allocated as a specific allowance. The measurement
of an impaired loan is based on (i) the present value of expected future cash flows discounted at the loan's effective interest
rate, (ii) the loan's observable market price or (iii) the fair value of the collateral if the loan is collateral dependent.
Troubled debt restructurings are separately
identified for impairment disclosures and are measured at the present value of estimated future cash flows using the loan's
effective rate at inception. If a trouble debt restructuring is considered to be a collateral dependent loan, the loan is reported,
net, at the fair value of the collateral. For troubled debt restructurings that subsequently default, we determine the amount of
reserve in accordance with the accounting policy for the allowance for loan losses.
The general component is based on historical
loss experience adjusted for current factors. The historical loss experience is determined by portfolio segment and is based on
the actual loss history experienced by the company. This actual loss experience is supplemented with other economic factors based
on the risks present for each portfolio segment. These economic factors include consideration of the following: levels of and trends
in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects
of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience,
ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry
conditions; and effects of changes in credit concentrations.
44
Table of Contents
We have identified the following loan segments:
Commercial Real Estate, Multifamily, Construction, Commercial, 1-4 Family Residential and Consumer. The risks associated with a
concentration in real estate loans include potential losses from fluctuating values of land and improved properties. Commercial
Real Estate and Multifamily loans are expected to be repaid from the cash flow of the underlying property so the collective amount
of rents must be sufficient to cover all operating expenses, property management and maintenance, taxes and debt service. Increases
in vacancy rates, interest rates or other changes in general economic conditions can all have an impact on the borrower and their
ability to repay the loan. Construction loans are considered riskier than commercial financing on improved and established commercial
real estate. The risk of potential loss increases if the original cost estimates or time to complete are significantly off. The
remainder of the loan portfolio is comprised of commercial and consumer loans. The primary risks associated with the commercial
loans are the cash flow of the business, the experience and quality of the borrowers' management, the business climate, and
the impact of economic factors. The primary risks associated with residential real estate and consumer loans relate to the borrower,
such as the risk of a borrower's unemployment as a result of deteriorating economic conditions or the amount and nature of
a borrower's other existing indebtedness, and the value of the collateral securing the loan if the bank must take possession
of the collateral.
Although management uses available information
to recognize losses on loans, because of uncertainties associated with local economic conditions, collateral values and future
cash flows on impaired loans, it is reasonably possible that a material change could occur in the allowance for loan losses in
the near term. However, the amount of the change that is reasonably possible cannot be estimated. The evaluation of the adequacy
of loan collateral is often based upon estimates and appraisals. Because of changing economic conditions, the valuations determined
from such estimates and appraisals may also change. Accordingly, we may ultimately incur losses that vary from management's
current estimates. Adjustments to the allowance for loan losses will be reported in the period such adjustments become known or
can be reasonably estimated. All loan losses are charged to the allowance for loan losses when the loss actually occurs or when the
collectability of the principal is unlikely. Recoveries are credited to the allowance at the time of recovery.
Income Taxes.
Income taxes are
provided for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates
is recognized in income in the period the change occurs. Deferred tax assets are reduced, through a valuation allowance, if necessary,
by the amount of such benefits that are not expected to be realized based on current available evidence.
A tax position is recognized as a benefit only
if it is "more likely than not" that the tax position would be sustained in a tax examination, with a tax examination
being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized
on examination. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded. The Company
recognizes interest and/or penalties related to income tax matters in income tax expense.
Emerging Growth Company.
Pursuant
to the JOBS Act, an emerging growth company is provided the option to adopt new or revised accounting standards that may be issued
by the Financial Accounting Standards Board ("FASB") or the SEC either (i) within the same periods as those otherwise
applicable to non-emerging growth companies or (ii) within the same time periods as private companies. We have irrevocably
elected to adopt new accounting standards within the public company adoption period.
Although we are still evaluating the JOBS Act,
we may take advantage of some of the reduced regulatory and reporting requirements that are available to it so long as we qualify
as an emerging growth company, including, but not limited to, not being required to comply with the auditor attestation requirements
of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation, and exemptions from
the requirements of holding non-binding advisory votes on executive compensation and golden parachute payments.
45
Table of Contents
Discussion and Analysis of Financial Condition
Assets
.
Our total assets were
$438.1 million at March 31, 2017, an increase of $13.2 million from $424.8 million at December 31, 2016. The increase was primarily
due to an increase in net loans of $11.9 million, or 4.3%, and an increase in securities available-for-sale of $11.0 million, or
11.9%, partially offset by a decrease in cash and cash equivalents of $10.4 million, or 24.2%.
Our total assets were $424.8 million at December
31, 2016, an increase of $72.2 million from $352.7 million at December 31, 2015. The increase was primarily due to an increase
in net loans of $53.4 million, or 24.1%, and an increase in cash and cash equivalents of $9.8 million.
Our total assets increased $22.0 million,
or 6.6%, to $352.7 million at December 31, 2015 from $330.7 million at December 31, 2014. The increase resulted primarily from
an increase in net loans and securities, partially offset by decreases in cash and cash equivalents.
Cash and Cash Equivalents.
Cash
and cash equivalents decreased $10.4 million, or 24.2%, to $32.6 million at March 31, 2017 from $43.0 million at December 31, 2016.
The decrease in cash and cash equivalents resulted from our using excess liquidity at December 31, 2016 to fund loan growth and
investments in securities.
Cash and cash equivalents increased $9.8 million,
or 29.7%, to $43.0 million at December 31, 2016 from $33.1 million at December 31, 2015.
Cash and cash equivalents decreased $38.8
million, or 53.9%, to $33.1 million at December 31, 2015 from $71.9 million at December 31, 2014. The decrease in cash and cash
equivalents resulted from our using excess liquidity at December 31, 2014 to fund loan growth and investments in securities.
Loan Portfolio Analysis.
At March
31, 2017, net loans were $287.0 million, or 65.5% of total assets, compared to $275.2 million, or 64.8% of total assets, at December
31, 2016. Commercial loans increased $6.8 million, or 6.4%, to $112.8 million at March 31, 2017 from $106.1 million at December
31, 2016. Multifamily loans increased $9.3 million, or 11.2%, to $92.8 million at March 31, 2017 from $83.4 million at December
31, 2016. Consumer loans increased $466,000, or 4.4%, to $11.0 million at March 31, 2017 from $10.6 million at December 31, 2016.
1-4 family residential loans decreased $2.0 million, or 4.1%, to $47.6 million at March 31, 2017 from $49.6 million at December
31, 2016. Construction loans also decreased by $1.6 million, or 27.7%, to $4.1 million at March 31, 2017 from $5.6 million at December
31, 2016. Commercial real estate loans decreased by $921,000, or 4.1%, to $21.3 million at March 31, 2017 from $22.2 million at
December 31, 2016. We have experienced continued success in growing our loan portfolio, as described in "Business—Business
Strategy."
At December 31, 2016, net loans were $275.2
million, or 64.8% of total assets, compared to $221.7 million, or 62.9% of total assets, at December 31, 2015. Commercial loans
increased $22.5 million, or 26.9%, to $106.1 million at December 31, 2016 from $83.6 million at December 31, 2015. Multifamily
loans increased $12.2 million, or 17.2%, to $83.4 million at December 31, 2016 from $71.2 million at December 31, 2015. Consumer
loans decreased $3.0 million or 22.0%, to $10.6 million at December 31, 2016 from $13.6 million at December 31, 2015. 1-4 family
residential loans increased $21.1 million, or 73.8%, to $49.6 million at December 31, 2016 from $28.5 million at December 31, 2015.
Construction loans also increased by $313,000, or 5.9%, to $5.6 million at December 31, 2016 from $5.3 million at December 31,
2015. Commercial real estate loans increased by $926,000, or 4.4%, to $22.2 million at December 31, 2016 from $21.3 million at
December 31, 2015.
At December 31, 2015, net loans were $221.7
million, or 62.9% of total assets, compared to $170.5 million, or 51.6% of total assets at December 31, 2014. Commercial loans
increased $17.9 million, or 27.3%, to $83.6 million at December 31, 2015 from $65.6 million at December 31, 2014. Multifamily
loans increased $12.6 million or 21.5% to $71.2 million at December 31, 2015 from $58.6 million at December 31, 2014. Commercial
real estate loans increased $7.5 million, or 54.4%, to $21.3 million at December 31, 2015 from $13.8 million at December 31, 2014.
1-4 family residential loans increased $5.5 million or 23.7% to $28.5 million at December 31, 2015 from $23.1 million at December
31, 2014. Construction loans also increased by $4.2 million to $5.3 million at December 31, 2015 from $1.1 million at December
31, 2014. Consumer loans increased by $4.0 million or 41.9% to $13.6 million at December 31, 2015 from $9.6 million at December
31, 2014.
46
Table of Contents
Loan Portfolio Composition.
The
following table sets forth the composition of our loan portfolio by type of loan at the dates indicated.
At
    March 31,
At December 31,
2017
2016
2015
Amount
Percent
Amount
Percent
Amount
Percent
(Dollars in thousands)
Real estate:
1-4 family residential
$
47,556
16.43
%
$
49,597
17.88
%
$
28,531
12.77
%
Multifamily
92,755
32.04
83,410
30.06
71,184
31.86
Commercial real estate
21,277
7.35
22,198
8.00
21,272
9.52
Construction
4,054
1.40
5,610
2.02
5,297
2.38
Total real estate
165,642
57.22
160,815
57.96
126,284
56.53
Commercial
112,818
38.97
106,064
38.23
83,563
37.40
Consumer
11,037
3.81
10,571
3.81
13,556
6.07
Total Loans
$
289,497
100.00
%
$
277,450
100.00
%
$
223,403
100.00
%
Allowance for loan losses
(3,523
)
(3,413
)
(2,799
)
Deferred loan costs, net
1,059
1,128
1,116
Loans, net
$
287,033
$
275,165
$
221,720
At
    December 31,
2014
2013
2012
Amount
Percent
Amount
Percent
Amount
Percent
(Dollars in thousands)
Real estate:
1-4 family residential
$
23,072
13.44
%
$
13,757
9.22
%
$
10,879
8.45
%
Multifamily
58,578
34.11
54,702
36.66
46,082
35.79
Commercial real estate
13,776
8.02
8,016
5.37
8,304
6.45
Construction
1,105
0.65
6,693
4.49
4,886
3.80
Total real estate
96,531
56.22
83,168
55.74
70,151
54.49
Commercial
65,643
38.22
60,833
40.77
53,928
41.88
Consumer
9,556
5.56
5,208
3.49
4,679
3.63
Total Loans
$
171,730
100.00
%
$
149,209
100.00
%
$
128,758
100.00
%
Allowance for loan losses
(2,165
)
(1,865
)
(1,855
)
Deferred loan costs, net
947
(27
)
(501
)
Loans, net
$
170,512
$
147,317
$
126,402
Loan Maturity.
The following table
sets forth certain information at December 31, 2016 regarding the contractual maturity of our loan portfolio. Demand loans, loans
having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less. The table does
not include any estimate of prepayments that could significantly shorten the average life of all loans and may cause our actual
repayment experience to differ from that shown below.
December 31, 2016
1-4 Family
Residential
Multifamily
Commercial
Real Estate
Construction
Commercial
Consumer
Total
Amounts due in:
(In thousands)
One year or less
$
8,725
$
21,578
$
―
$
1,580
$
92,288
$
8,921
$
133,092
More than one to five years
30,478
38,782
13,920
4,030
13,776
1,302
102,288
More than five to ten years
7,456
13,701
5,338
―
―
348
26,843
More than ten years
2,938
9,349
2,940
―
―
―
15,227
Total
$
49,597
$
83,410
$
22,198
$
5,610
$
106,064
$
10,571
$
277,450
47
Table of Contents
The following table sets forth fixed and adjustable-rate
loans at December 31, 2016 that are contractually due after December 31, 2017.
Due
    After December 31, 2017
Fixed
Adjustable
Total
Real estate
(In thousands)
1-4 family residential
$
40,586
$
286
$
40,872
Multifamily
53,702
8,130
61,832
Commercial real estate
18,437
3,762
22,199
Construction
4,030
―
4,030
Commercial
988
12,788
13,776
Consumer
1,649
―
1,649
Total
$
119,392
$
24,966
$
144,358
At March 31, 2017, $42.3 million, or 26.2% of
our adjustable interest rate loans were at their interest rate floor.
Delinquent Loans.
The following
tables set forth our loan delinquencies, including non-accrual loans, by type and amount at the dates indicated.
At
    March 31, 2017
At
    December 31, 2016
At
    December 31, 2015
30-59
Days
Past
Due
60-89
Days
Past
Due
90
    Days
or More
Past Due
30-59
Days
Past
Due
60-89
Days
Past
Due
90
    Days
or More
Past Due
30-59
Days
Past
Due
60-89
Days
Past
Due
90
    Days
or More
Past Due
(Dollars in thousands)
1-4 family residential
$
―
$
―
$
―
$
203
$
―
$
―
$
―
$
―
$
―
Multifamily
―
―
―
―
―
―
―
―
―
Commercial real estate
―
―
―
―
―
―
―
―
―
Construction
―
―
―
―
―
―
―
―
―
Commercial
284
―
―
―
―
―
―
―
―
Consumer
―
―
―
―
―
―
―
―
―
Total
$
284
$
―
$
―
$
203
$
―
$
―
$
―
$
―
$
―
At
    December 31, 2014
At
    December 31, 2013
At
    December 31, 2012
30-59
Days
Past
Due
60-89
Days
Past
Due
90
    Days
or More
Past Due
30-59
Days
Past
Due
60-89
Days
Past
Due
90
    Days
or More
Past Due
30-59
Days
Past
Due
60-89
Days
Past
Due
90
    Days
or More
Past Due
(Dollars in thousands)
1-4 family residential
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
Multifamily
―
―
―
―
843
―
336
―
264
Commercial real estate
―
―
―
―
685
―
―
―
―
Construction
―
―
―
―
―
634
―
―
―
Commercial
―
2,100
―
―
―
―
―
―
―
Consumer
―
―
―
―
―
―
―
―
―
Total
$
―
$
2,100
$
―
$
―
$
1,528
$
634
$
336
$
―
$
264
48
Table of Contents
Non-performing Assets.
Non-performing assets include loans that are
90 or more days past due or on non-accrual status, including troubled debt restructurings on non-accrual status, and real estate
and other loan collateral acquired through foreclosure and repossession. Troubled debt restructurings include loans for economic
or legal reasons related to the borrower's financial difficulties, for which we grant a concession to the borrower that we
would not consider otherwise. Loans 90 days or greater past due may remain on an accrual basis if adequately collateralized and
in the process of collection. At March 31, 2017 and December 31, 2016, we did not have any accruing loans past due 90 days or greater
or troubled debt restructurings. For non-accrual loans, interest previously accrued but not collected is reversed and charged against
income at the time a loan is placed on non-accrual status. Loans are returned to accrual status when all the principal and interest
amounts contractually due are brought current and future payments are reasonably assured.
Real estate that we acquire as a result of foreclosure
or by deed-in-lieu of foreclosure is classified as foreclosed real estate until it is sold. When property is acquired, it is initially
recorded at the fair value less costs to sell at the date of foreclosure, establishing a new cost basis. Holding costs and declines
in fair value after acquisition of the property result in charges against income. We have not had any foreclosed assets for the
periods presented.
The following table sets forth information regarding
our non-performing assets at the dates indicated.
At
    March 31,
At
    December 31,
2017
2016
2015
2014
2013
2012
(Dollars in thousands)
Non-accrual loans:
1- 4 family residential
$
―
$
―
$
―
$
―
$
―
$
―
Multifamily
―
―
―
―
―
264
Commercial real estate
―
―
―
―
―
―
Construction
―
―
―
―
634
―
Commercial
―
―
―
―
―
―
Consumer
―
―
―
―
―
―
Total non-accrual loans
$
―
$
―
$
―
$
―
$
634
$
264
Other real estate owned
―
―
―
―
―
―
Loans past due 90 days and still accruing
―
―
―
―
―
―
Troubled debt restructurings
―
―
―
―
―
―
Total nonperforming assets
$
―
$
―
$
―
$
―
$
634
$
264
Total loans
(1)
$
290,556
$
278,578
$
224,519
$
172,677
$
149,182
$
128,257
Total assets
$
438,059
$
424,833
$
352,650
$
330,690
$
237,580
$
222,181
Total non-accrual loans to total loans
―
%
―
%
―
%
―
%
0.42
%
0.21
%
Total non-performing assets to total assets
―
%
―
%
―
%
―
%
0.27
%
0.12
%
(1)
Loans are presented before the allowance for loan losses but include deferred fees/costs.
49
Table of Contents
Allowance for Loan Losses.
Please see "–Critical Accounting
Policies – Allowance for Loan Losses" for additional discussion of our allowance policy.
The allowance for loan losses is maintained
at levels considered adequate by management to provide for probable loan losses inherent in the loan portfolio as of the consolidated
balance sheet reporting dates. The allowance for loan losses is based on management's assessment of various factors affecting
the loan portfolio, including portfolio composition, delinquent and non-accrual loans, national and local business conditions and
loss experience and an overall evaluation of the quality of the underlying collateral.
The following table sets forth activity in our
allowance for loan losses for the periods indicated.
For
    the three months
ended March 31,
For
    the years ended December 31,
2017
2016
2016
2015
2014
2013
2012
(Dollars in thousands)
Allowance at beginning of year
$
3,413
$
2,799
$
2,799
$
2,165
$
1,865
$
1,855
$
670
Provision for loan losses
150
145
595
930
300
60
1,255
Charge-offs:
1-4 family residential
―
―
―
―
―
―
―
Multifamily
―
―
―
―
―
39
70
Commercial real estate
―
―
―
―
―
―
―
Construction
―
―
―
―
―
12
―
Commercial
―
―
―
296
―
―
―
Consumer
40
―
7
―
―
―
―
Total charge-offs
40
―
7
296
―
51
70
Recoveries:
1-4 family residential
―
―
―
―
―
―
―
Multifamily
―
―
―
―
―
1
―
Commercial real estate
―
―
―
―
―
―
―
Construction
―
―
―
―
―
―
―
Commercial
―
25
26
―
―
―
―
Consumer
―
―
―
―
―
―
―
Total recoveries
―
25
26
―
―
1
―
Allowance at end of year
$
3,523
$
2,969
$
3,413
$
2,799
$
2,165
$
1,865
$
1,855
Nonperforming loans at end of period
$
―
$
―
$
―
$
―
$
―
$
634
$
264
Total loans outstanding at end of period
(1)
$
290,556
$
236,263
$
278,578
$
224,519
$
172,677
$
149,182
$
128,257
Average loans outstanding during the period
(1)
$
278,188
$
228,007
$
248,068
$
187,317
$
147,330
$
134,748
$
109,875
Allowance for loan losses to non-performing loans
N/A
N/A
N/A
N/A
N/A
294.16
%
702.65
%
Allowance for loan losses to total loans at end of the period
(1)
1.21
%
1.26
%
1.23
%
1.25
%
1.25
%
1.25
%
1.45
%
Net charge-offs to average loans outstanding during the period
0.01
%
(0.01
)%
(0.01
)%
0.16
%
0.00
%
0.04
%
0. 06
%
(1)
Loans are presented before the allowance for loan losses but include deferred fees/costs.
50
Table of Contents
Allocation of Allowance for Loan Losses.
The following tables set forth the allowance for loan losses allocated by loan category. The allowance for loan losses
allocated to each category is not necessarily indicative of future losses in any particular category and does not restrict the
use of the allowance to absorb losses in other categories.
At March 31,
At December 31,
2017
2016
2015
Allowance
for Loan
Losses
Percent of
Loans in
Each
Category to
Total Loans
Allowance
for Loan
Losses
Percent of
Loans in
Each
Category
to Total
Loans
Allowance
for Loan
Losses
Percent of
Loans in
Each
Category
to Total
Loans
(Dollars in thousands)
1-4 family residential
$
350
16.43
%
$
360
17.88
%
$
213
12.77
%
Multifamily
669
32.04
621
30.06
533
31.86
Commercial real estate
227
7.35
238
8.00
230
9.52
Construction
102
1.40
141
2.02
134
2.38
Commercial
2,039
38.97
1,934
38.23
1,536
37.40
Consumer
136
3.81
119
3.81
153
6.07
Total allocated allowance
$
3,523
100.00
%
$
3,413
100.00
%
$
2,799
100.00
%
At December 31,
2014
2013
2012
Allowance
for Loan
Losses
Percent of
Loans in
Each
Category to
Total
Loans
Allowance
for Loan
Losses
Percent of
Loans in
Each
Category
to Total
Loans
Allowance
for Loan
Losses
Percent of
Loans in
Each
Category
to Total
Loans
(Dollars in thousands)
1-4 family residential
$
162
13.44
%
$
60
9.22
%
$
61
8.45
%
Multifamily
528
34.11
536
36.66
549
35.79
Commercial real estate
97
8.02
115
5.37
119
6.45
Construction
27
0.65
98
4.49
115
3.80
Commercial
1,222
38.22
960
40.77
946
41.88
Consumer
129
5.56
96
3.49
65
3.63
Total allocated allowance
$
2,165
100.00
%
$
1,865
100.00
%
$
1,855
100.00
%
The allowance for loan losses as a percentage
of loans was 1.21%, 1.23% and 1.25% as of March 31, 2017, December 31, 2016 and 2015, respectively. The decrease in the allowance
percentage from December 31, 2016 to March 31, 2017 was primarily due to changes in the composition of the loan portfolio.
The allowance consists of general and allocated
components. The general component relates to pools of non-impaired loans and is based on historical loss experience adjusted for
qualitative factors. The allocated component relates to loans that are classified as impaired, whereby an allowance is established
when the discounted cash flows, collateral value or observable market price of the impaired loan is lower than the carrying value
of that loan.
A loan is considered impaired when, based on
current information and events, it is probable that we will be unable to collect the scheduled payments of principal or interest
when due according to the contractual terms of the loan agreement. Factors considered by us in determining impairment include payment
status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience
insignificant payment delays and payment shortfalls generally are not classified as impaired. We determine the significance of
payment delays and payment shortfalls on case-by-case basis, taking into consideration all of the circumstances surrounding the
loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record,
and the amount of the shortfall in relation to the principal and interest owed. The measurement of an impaired loan is based on
(i) the present value of expected future cash flows discounted at the loan's effective interest rate, (ii) the
loan's observable market price or (iii) the fair value of the collateral if the loan is collateral dependent.
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Table of Contents
We had no impaired loans at March 31, 2017,
December 31, 2016, December 31, 2015 and December 31, 2014.
All loans except for consumer loans are individually
evaluated for impairment.
Troubled debt restructurings are separately
identified for impairment disclosures and are measured at the present value of estimated future cash flows using the loan's
effective rate at inception. If a troubled debt restructuring is considered to be a collateral dependent loan, the loan is reported,
net, at the fair value of the collateral. For troubled debt restructurings that subsequently default, we determine the amount of
reserve in accordance with the accounting policy for the allowance for loan losses.
Interest income on mortgage and commercial loans
is discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. Consumer
loans are typically charged off no later than 120 days past due. Past due status is based on the contractual terms of the loan.
In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered
doubtful. Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are
collectively evaluated for impairment and individually classified impaired loans. A loan is moved to non-accrual status in accordance
with our loan policy, typically after 90 days of non-payment.
All interest accrued but not received for loans
placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or
cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest
amounts contractually due are brought current and future payments are reasonably assured.
Although we believe that we use the best information
available to establish the allowance for loan losses, future adjustments to the allowance for loan losses may be necessary and
our results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making
the determinations. Furthermore, while we believe we have established our allowance for loan losses in conformity with generally
accepted accounting principles in the United States of America, there can be no assurance that regulators, in reviewing our loan
portfolio, will not require us to increase our allowance for loan losses. In addition, because future events affecting borrowers
and collateral cannot be predicted with certainty, there can be no assurance that the existing allowance for loan losses is adequate
or that increases will not be necessary should the quality of any loans deteriorate as a result of the factors discussed above.
Any material increase in the allowance for loan losses may adversely affect our financial condition and results of operations.
Securities Portfolio
The following table sets forth the amortized
cost and estimated fair value of our available-for-sale securities portfolio at the dates indicated. Our securities portfolio has
decreased in recent years as we have used excess cash to fund our loan growth instead of re-investing the proceeds in investment
securities.
At December 31,
At March 31, 2017
2016
2015
2014
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
(In thousands)
Government agency debentures
$
—
$
—
$
—
$
—
$
4,064
$
4,001
$
4,074
$
3,980
Mortgage backed securities-agency
15,842
15,417
16,417
16,012
17,445
17,147
17,884
17,709
Collateralized mortgage obligations-agency
89,076
88,235
77,677
76,633
63,447
63,091
49,380
49,236
Total
$
104,918
$
103,652
$
94,094
$
92,645
$
84,956
$
84,239
$
71,338
$
70,925
At March 31, 2017 and December 31, 2016, we
had no investments in a single company or entity, other than government and government agency securities, which had an aggregate
book value in excess of 10% of our equity.
We review the investment portfolio on a quarterly
basis to determine the cause, magnitude and duration of declines in the fair value of each security. In estimating other-than-temporary
impairment (OTTI), we consider many factors including: (1) the length of time and extent that fair value has been less than
cost, (2) the financial condition
52
Table of Contents
and near term prospects of the issuer, (3) whether the market
decline was affected by macroeconomic conditions, and (4) whether we have the intent to sell the security or more likely than
not will be required to sell the security before its anticipated recovery. If either of the criteria regarding intent or requirement
to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt
securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: (1) OTTI
related to credit loss, which must be recognized in the income statement and (2) OTTI related to other factors, which is recognized
in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected
to be collected and the amortized cost basis. The assessment of whether any other than temporary decline exists may involve a high
degree of subjectivity and judgment and is based on the information available to management at a point in time. We evaluate securities
for OTTI at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.
At March 31, 2017 and December 31, 2016,
securities in unrealized loss positions were issuances from government sponsored entities. Due to the decline in fair value attributable
to changes in interest rates and illiquidity, not credit quality and because we do not have the intent to sell the securities and
it is likely that it will not be required to sell the securities before their anticipated recovery, we do not consider the securities
to be other-than-temporarily impaired at March 31, 2017 and December 31, 2016.
No impairment charges were recorded for the
three months ended March 31, 2017 and 2016 or for the years ended December 31, 2016, 2015 and 2014.
53
Table of Contents
Portfolio Maturities and Yields.
The
composition and maturities of the investment securities portfolio at March 31, 2017, are summarized in the following table. No
tax-equivalent yield adjustments have been made, as the amount of tax free interest earning assets is immaterial.
At
    March 31, 2017
One
    Year or Less
More
    Than One Year
through Five Years
More
    Than Five Years
Through Ten Years
More
    Than Ten Years
Total
Book
Value
Weighted
Average
Yield
Book
Value
Weighted
Average
Yield
Book
Value
Weighted
Average
Yield
Book
Value
Weighted
Average
Yield
Book
Value
Weighted
Average
Yield
(Dollars in thousands)
Mortgage backed securities-agency
$
—
—
$
—
—
$
—
—
$
15,842
2.10
$
15,842
2.10
Collateralized mortgage obligations-agency
$
—
—
$
—
—
$
4,545
2.22
$
84,531
2.14
$
89,076
2.15
Total securities available for sale
$
%
$
%
$
4,545
2.22
%
$
100,373
2.14
%
$
104,918
2.14
%
54
Table of Contents
Deposits
Total deposits increased $12.6 million, or 3.4%,
to $383.4 million at March 31, 2017 from $370.8 million at December 31, 2016. We continue to focus on the acquisition and expansion
of core deposit relationships, which we define as all deposits except for certificates of deposit. Core deposits totaled $360.7
million at March 31, 2017, or 94.0% of total deposits at that date.
Total deposits increased $69.1 million,
or 23.0%, to $370.8 million at December 31, 2016 from $301.7 million at December 31, 2015. We continue to focus on the acquisition
and expansion of core deposit relationships. Core deposits totaled $346.8 million at December 31, 2016, or 93.5% of total deposits
at that date.
Total deposits increased $10.9 million,
or 3.8%, to $301.7 million at December 31, 2015 from $290.8 million at December 31, 2014. Core deposits totaled $291.8 million
at December 31, 2015, or 96.7% of total deposits at that date.
The following tables set forth the distribution
of average deposits by account type at the dates indicated.
For
    the Three Months Ended March 31,
For
    the Years Ended December 31,
2017
2016
Average
Balance
Percent
Average
Rate
Average
Balance
Percent
Average
Rate
(Dollars in thousands)
Demand
$
125,949
34.51
%
0.00
%
$
105,035
32.29
%
0.00
%
Savings, NOW and Money Market
222,257
60.90
%
0.20
%
203,185
62.47
%
0.20
%
Time
16,755
4.59
%
0.54
%
17,041
5.24
%
0.42
%
Total deposits
$
364,961
100.00
%
0.15
%
$
325,261
100.00
%
0.16
%
For
    the Years Ended December 31,
2015
2014
Average
Balance
Percent
Average
Rate
Average
Balance
Percent
Average
Rate
(Dollars in thousands)
Demand
$
95,820
33.83
%
0.00
%
$
72,202
29.60
%
0.00
%
Savings, NOW and Money Market
176,892
62.46
%
0.20
%
158,596
65.02
%
0.22
%
Time
10,494
3.71
%
0.74
%
13,107
5.38
%
0.70
%
Total deposits
$
283,206
100.00
%
0.15
%
$
243,905
100.00
%
0.18
%
As of March 31, 2017, the aggregate amount of
all our certificates of deposit in amounts greater than or equal to $100,000 was approximately $18.6 million. The following table
sets forth the maturity of these certificates as of March 31, 2017.
At
March 31, 2017
(In thousands)
Maturing period:
Three months or less
$
14,604
Over three months through six months
1,057
Over six months through twelve months
1,193
Over twelve months
1,753
Total Certificates
$
18,607
Borrowings
At March 31, 2017, we had the ability to borrow
a total of $78.8 million from the Federal Home Loan Bank of New York. We also had an available line of credit with the Federal
Reserve Bank of New York discount window of $15.1 million. At March 31, 2017, we also had a $3.5 million and $4.0 million line
of credit with Atlantic Community Bankers' Bank and Zions Bank, respectively. No amounts were outstanding on any of the aforementioned
lines as of March 31, 2017.
At December 31, 2016, we had the ability to
borrow a total of $72.8 million from the Federal Home Loan Bank of New York. At December 31, 2016, we also had an available line
of credit with the Federal Reserve Bank of New York discount window of $15.6 million. At December 31, 2016, we also had a $3.5
million and $4.0 million line of credit with Atlantic Community Bankers' Bank and Zions Bank, respectively. No amounts were
outstanding on any of the aforementioned lines as of December 31, 2016.
At December 31, 2015, we had the ability
to borrow a total of $69.4 million from the Federal Home Loan Bank of New York. At December 31, 2015, we also had an available
line of credit with the Federal Reserve Bank of New York discount window of $10.8 million. At December 31, 2015, we also had a
$3.5 million and $4.0 million line of credit with Atlantic Community Bankers' Bank and Zions Bank, respectively. No amounts
were outstanding on any of the aforementioned lines as of December 31, 2015.
55
Table of Contents
Stockholders' Equity
Total stockholders' equity increased $1.1
million, or 2.0%, to $53.2 million at March 31, 2017, from $52.2 million at December 31, 2016. The increase for the three months
ended March 31, 2017 was primarily due to $815,000 in net income.
Total stockholders' equity increased $2.8
million, or 5.6%, to $52.2 million at December 31, 2016, from $49.4 million at December 31, 2015. The increase for the year
ended December 31, 2016 was primarily due to $2.8 million in net income.
Total stockholders' equity increased
$10.9 million, or 28.2%, to $49.4 million at December 31, 2015, from $38.5 million at December 31, 2014. The increase for the
year ended December 31, 2015 was due primarily to a $9.8 million capital raise through issuance of stock and $1.2 million in net
income, partially offset by a $184,000 increase in accumulated other comprehensive loss due to changes in the fair value of securities
available for sale.
56
Table of Contents
Average Balance Sheets and Related Yields and Rates
The following tables present average balance
sheet information, interest income, interest expense and the corresponding average yields earned and rates paid for the three months
ended March 31, 2017 and 2016 and for the years ended December 31, 2016, 2015 and 2014. The average balances are daily averages
and, for loans, include both performing and nonperforming balances. Interest income on loans includes the effects of discount accretion
and net deferred loan origination costs accounted for as yield adjustments.
For
    the Three Months Ended March 31,
2017
2016
(Dollars in thousands)
Average
Balance
Interest
Average
Yield/Rate
Average
Balance
Interest
Average
Yield/Rate
INTEREST EARNING ASSETS
Loans
$
278,188
$
3,827
5.58
%
$
228,007
$
3,225
5.69
%
Securities, includes restricted stock
99,409
528
2.15
%
84,525
473
2.25
%
Interest earning cash
33,888
77
0.92
%
29,322
35
0.48
%
Total interest earning assets
411,485
4,432
4.37
%
341,854
3,733
4.39
%
NON-INTEREST EARNING ASSETS
Cash and due from banks
523
554
Other assets
8,644
9,068
TOTAL AVERAGE ASSETS
$
420,652
$
351,476
INTEREST-BEARING LIABILITIES
Savings, NOW, Money Markets
$
222,257
109
0.20
%
$
183,579
90
0.20
%
Time deposits
16,755
22
0.53
%
12,275
5
0.16
%
Total deposits
239,012
131
0.22
%
195,854
95
0.20
%
Secured borrowings
343
6
7.09
%
382
6
6.32
%
Total borrowings
343
6
7.09
%
382
6
6.32
%
Total interest-bearing liabilities
239,355
137
0.23
%
196,236
101
0.21
%
NON-INTEREST BEARING LIABILITIES
Demand deposits
125,949
102,711
Other liabilities
2,435
2,267
Total non-interest bearing liabilities
128,384
104,978
Stockholders' equity
52,913
50,262
TOTAL AVERAGE LIABILITIES AND EQUITY
$
420,652
$
351,476
Net interest spread
$
4,295
4.14
%
$
3,632
4.18
%
Net interest margin
4.23
%
4.27
%
57
Table of Contents
Year
    Ended December 31,
2016
2015
2014
(Dollars in thousands)
Average
Balance
Interest
Average
Yield/Rate
Average
Balance
Interest
Average
Yield/Rate
Average
Balance
Interest
Average
Yield/Rate
INTEREST EARNING ASSETS
Loans
$
248,068
$
14,071
5.67
%
$
187,317
$
10,594
5.66
%
$
147,330
8,891
6.03
%
Securities, includes restricted stock
87,830
1,875
2.13
%
78,021
1,713
2.20
%
75,282
1,722
2.29
%
Interest earning cash
32,849
222
0.68
%
55,309
144
0.26
%
42,989
101
0.23
%
Total interest earning assets
368,747
16,168
4.38
%
320,647
12,451
3.88
%
265,601
10,714
4.03
%
NON-INTEREST EARNING ASSETS
Cash and due from banks
550
556
2,994
Other assets
11,397
8,509
8,717
TOTAL AVERAGE ASSETS
$
380,694
$
329,712
$
277,312
INTEREST-BEARING LIABILITIES
Savings, NOW, Money Markets
$
203,185
414
0.20
%
$
176,892
353
0.20
%
$
158,596
345
0.22
%
Time deposits
17,041
72
0.42
%
10,494
78
0.74
%
13,107
92
0.70
%
Total deposits
220,226
486
0.22
%
187,386
431
0.23
%
171,703
437
0.25
%
Secured borrowings
405
25
6.17
%
388
26
6.70
%
449
29
6.46
%
Total borrowings
405
25
6.17
%
388
26
6.70
%
449
29
6.46
%
Total interest-bearing liabilities
220,631
511
0.23
%
187,774
457
0.24
%
172,152
466
0.27
%
NON-INTEREST BEARING LIABILITIES
Demand deposits
105,035
95,820
72,202
Other liabilities
2,391
2,008
1,605
Total liabilities
107,426
97,828
73,807
Stockholders' equity
52,637
44,110
31,353
TOTAL AVERAGE LIABILITIES AND EQUITY
$
380,694
$
329,712
$
277,312
Net interest spread
$
15,657
4.15
%
$
11,994
3.64
%
10,248
3.76
%
Net interest margin
4.25
%
3.74
%
3.86
%
58
Table of Contents
The following table presents the dollar amount
of changes in interest income and interest expense for major components of interest earning assets and interest bearing liabilities
for the periods indicated. The table distinguishes between: (1) changes attributable to volume (changes in volume multiplied by
the prior period's rate); (2) changes attributable to rate (change in rate multiplied by the prior year's volume) and
(3) total increase (decrease) (the sum of the previous columns). Changes attributable to both volume and rate are allocated ratably
between the volume and rate categories.
For
    the Three Months Ended
March 31,
2017 vs. 2016
For
    the Year Ended
December 31,
2016 vs. 2015
Increase
(Decrease) due to
Increase
(Decrease) due to
Volume
Rate
Total
Increase
(Decrease)
Volume
Rate
Total
Increase
(Decrease)
(dollars in thousands)
Interest earned on:
Loans
$
668
$
(66
)
$
602
$
3,446
$
31
$
3,477
Securities, includes restricted stock
77
(22
)
55
210
(48
)
162
Interest earning cash
6
36
42
(77
)
155
78
Total interest income
751
(52
)
699
3,579
138
3,717
Interest paid on:
Savings, NOW, Money Markets
18
1
19
54
7
61
Time deposits
2
15
17
36
(42
)
(6
)
Total deposits
20
16
36
90
(35
)
55
Secured borrowings
(1
)
1
—
1
(2
)
(1
)
Total interest expense
19
17
36
91
(37
)
54
Change in net interest income
$
732
$
(69
)
$
663
$
3,488
$
175
$
3,663
For
    the Years Ended
December 31,
2015 vs. 2014
Increase
(Decrease) due to
Total
Increase
Volume
Rate
(Decrease)
(dollars in thousands)
Interest earned on:
Loans
$
2,290
$
(587
)
$
1,703
Securities, includes restricted stock
61
(70
)
(9
)
Interest earning cash
31
12
43
Total interest income
2,382
(645
)
1,737
Interest paid on:
Savings, NOW, Money Markets
38
(30
)
8
Time deposits
(19
)
5
(14
)
Total deposits
19
(25
)
(6
)
Secured borrowings
(4
)
1
(3
)
Total interest expense
15
(24
)
(9
)
Change in net interest income
$
2,367
$
(621
)
$
1,746
Results of Operations for the Three Months
Ended March 31, 2017 and 2016
General.
Net income increased
$172,000 or 26.8%, to $815,000 for the three months ended March 31, 2017 from $643,000 for the three months ended March 31, 2016.
The increase resulted from a $663,000 increase in net interest income and a $217,000 increase in noninterest income, which were
partially offset by a $604,000 increase in noninterest expense.
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Table of Contents
Interest Income.
Interest income
increased $699,000, or 18.7%, to $4.4 million for the three months ended March 31, 2017 from $3.7 million for the three months
ended March 31, 2016. This was attributable to an increase in interest and fees on loans, which increased $602,000, or 18.7%, to
$3.8 million for the three months ended March 31, 2017 from $3.2 million for the three months ended March 31, 2016.
The increase in interest income on loans was
due to an increase in average balance of loans of $50.2 million, or 22.0%, to $278.2 million for the three months ended March 31,
2017 from $228.0 million for the three months ended March 31, 2016. This increase was due to our continued success in growing our
loans.
Interest Expense.
Interest expense
increased $36,000, or 35.6%, to $137,000 for the three months ended March 31, 2017 from $101,000 for the three months ended March
31, 2016, caused by an increase in average-interest bearing deposits. The average rate we paid on interest bearing deposits increased
2 basis points to 0.23% for the three months ended March 31, 2017 from 0.20% for the three months ended March 31, 2016. Our average
balance of interest bearing deposits increased $43.2 million, or 22%, to $239.0 million for the three months ended March 31, 2017
from $195.9 million for the three months ended March 31, 2016.
Net Interest Income.
Net interest
income increased $663,000, or 18.3%, to $4.3 million for the three months ended March 31, 2017 from $3.6 million for the three
months ended March 31, 2016. Our net interest rate spread decreased four basis points to 4.14% for the three months ended March
31, 2017 from 4.18% for the three months ended March 31, 2016, while our net interest margin decreased four basis points to 4.23%
for the three months ended March 31, 2017 from 4.27% for the three months ended March 31, 2016. The average yield we earned on
interest earning assets decreased two basis points to 4.37% and the average rate we paid on interest bearing liabilities increased
by two basis points to 0.23%.
Provision for Loan Losses.
Our
provision for loan losses was $150,000 for the three months ended March 31, 2017 compared to $145,000 for the three months ended
March 31, 2016. The provisions recorded resulted in an allowance for loan losses of $3.5 million, or 1.21% of total loans at March
31, 2017, compared to $3.0 million, or 1.26% of total loans at March 31, 2016.
Noninterest Income.
Noninterest
income information is as follows:
For
    the Three Months
Ended March 31,
Change
2017
2016
Amount
Percent
(Dollars in thousands)
Noninterest income
Customer related fees and service charges
$
366
$
228
$
138
60.53
%
Merchant processing income
838
$
753
85
11.29
Gains of sales of securities
—
$
6
(6
)
(100.00
)
Total noninterest income
$
1,204
$
987
$
217
21.99
%
Merchant processing income increased primarily
due to revenue from ACH fees, an addition to the services offered as part of merchant processing. Customer related fees and charges
have also increased due to overall increases in the balances and count of our deposit customers.
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Table of Contents
Noninterest Expense.
Noninterest
expense information is as follows:
For
    the Three
Months Ended
March 31,
Change
2017
2016
Amount
Percent
(Dollars in thousands)
Noninterest expense
Employee compensation and benefits
$
2,345
$
1,962
$
383
19.52
%
Occupancy and equipment
387
282
105
37.23
Professional and consulting services
389
413
(24
)
(5.81
)
FDIC assessment
42
50
(8
)
(16.00
)
Advertising and marketing
110
143
(33
)
(23.08
)
Travel and business relations
106
74
32
43.24
OCC assessments
29
26
3
11.54
Data processing
370
339
31
9.14
Other operating expenses
246
131
115
87.79
Total noninterest expense
$
4,024
$
3,420
$
604
17.66
%
Salaries and employee benefits increased for
the three months ended March 31, 2017 from the three months ended March 31, 2016 primarily due to increases in the number of employees,
increases in incentive compensation tied to performance and salary increases. Occupancy and equipment expense increased primarily
due to additional expense from the new lease for our new headquarters that commenced in the fourth quarter of 2016.
Income Tax Expense.
We recorded
an income tax expense of $510,000 for the three months ended March 31, 2017, reflecting an effective tax rate of 38.5%, compared
to $411,000, or 39.0%, for the three months ended March 31, 2016.
Results of Operations for the Years Ended
December 31, 2016 and 2015
General.
Net income increased
$1.7 million or 140.8%, to $2.8 million for the year ended December 31, 2016 from $1.2 million for the year ended December 31,
2015. The increase resulted from a $3.7 million increase in net interest income and an $1.2 million increase in noninterest income,
which were partially offset by a $2.4 million increase in noninterest expense.
Interest Income.
Interest income
increased $3.7 million or 29.9%, to $16.2 million for the year ended December 31, 2016 from $12.5 million for the year ended December
31, 2015. This was attributable to an increase in interest and fees on loans, which increased $3.5 million, or 32.8%, to $14.1
million for the year ended December 31, 2016 from $10.6 million for the year ended December 31, 2015.
The increase in interest income on loans was
due to an increase in average balance of loans of $60.8 million, or 32.4%, to $248.1 million for the year ended December 31, 2016
from $187.3 million for the year ended December 31, 2015. This increase was due to our continued success in growing multifamily
loans, commercial real estate loans, commercial loans and consumer loans.
Interest Expense.
Interest expense
increased $54,000, or 11.8%, to $511,000 for the year ended December 31, 2016 from $457,000 for the year ended December 31,
2015, caused by an increase in average-interest bearing deposits. The average rate we paid on interest bearing deposits decreased
1 basis point to 0.22% for the year ended December 31, 2016 from 0.23% for the year ended December 31, 2015. Our average
balance of interest bearing deposits increased $26.3 million, or 14.9%, to $203.2 million for the year ended December 31,
2016 from $176.9 million for the year ended December 31, 2015.
Net Interest Income.
Net interest
income increased $3.7 million, or 30.5%, to $15.7 million for the year ended December 31, 2016 from $12.0 million for the
year ended December 31, 2015. Our net interest rate spread increased 51 basis points to 4.15% for the year ended December 31,
2016 from 3.64% for the year ended December 31, 2015, while our net interest margin increased 51 basis points to 4.25% for
the year ended December 31, 2016 from 3.74% for the year ended December 31, 2015. Although the average yield we earned
on interest earning assets increased 50 basis points to 4.38%, we were able to decrease the average rate we paid on interest bearing
liabilities by 1 basis point to 0.22%.
Provision for Loan Losses.
Our
provision for loan losses was $595,000 for the year ended December 31, 2016 compared to $930,000 for the year ended December 31,
2015. The provisions recorded resulted in an allowance for loan losses of $3.4 million, or 1.23% of total loans at December 31,
2016, compared to $2.8 million, or 1.25% of total loans at December 31, 2015.
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Table of Contents
Noninterest Income.
Noninterest
income information is as follows:
For
    the Year Ended
December 31,
Change
2016
2015
Amount
Percent
(Dollars
    in thousands)
Noninterest income
Customer related fees and service charges
$
1,180
$
741
$
439
59.2
%
Merchant processing income
2,939
2,202
737
33.5
Gains of sales of securities
6
—
6
N/A
Total noninterest income
$
4,125
$
2,943
$
1,182
40.2
%
Merchant processing income increased significantly
due to significant growth in our business. Average monthly volumes increased to $302.8 million for 2016 compared to $269.2 million
for 2015. Customer related fees and charges have increased due to overall increases in the balances and count of our deposit customers.
Noninterest Expense.
Noninterest
expense information is as follows:
For
    the Year Ended
December 31,
Change
2016
2015
Amount
Percent
(Dollars in thousands)
Noninterest expense
Employee compensation and benefits
$
8,244
$
6,251
$
1,993
31.9
%
Occupancy and equipment
1,604
1,412
192
13.6
Professional and consulting services
1,642
1,699
(57
)
(3.4
)
FDIC assessment
99
245
(146
)
(59.6
)
Advertising and marketing
430
334
96
28.7
Travel and business relations
324
301
23
7.6
OCC assessments
112
105
7
6.7
Data processing
1,369
1,187
182
15.3
Other operating expenses
775
637
138
21.7
Total noninterest expense
$
14,599
$
12,171
$
2,428
19.9
%
Salaries and employee benefits increased for
the year ended December 31, 2016 from the year ended December 31, 2015 primarily due to increases in the number of employees,
increases in incentive compensation tied to performance and salary increases. Occupancy and equipment expense increased primarily
due to write-offs related to the closure of our New York City administrative office.
Income Tax Expense.
We recorded
an income tax expense of $1.8 million for the year ended December 31, 2016, reflecting an effective tax rate of 38.5%, compared
to $664,000, or 36.2%, for the year ended December 31, 2015.
Results of Operations for the
Years Ended December 31, 2015 and 2014
General.
Net income
increased $1.1 million, to $1.2 million for the year ended December 31, 2015 from $41,000 for the year ended December 31, 2014.
The increase was due to an increase in net interest income and noninterest income.
Interest Income.
Interest
income increased $1.7 million, or 16.3%, to $12.5 million for the year ended December 31, 2015 from $10.7 million for the year
ended December 31, 2014. This was caused by an increase in interest and fees on loans, which increased $1.7 million, or 19.2%,
to $10.6 million for the year ended December 31, 2015 from $8.9 million for the year ended December 31, 2014.
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Table of Contents
The increase in interest income on
loans was due to an increase in the average balance of loans of $40.0 million, or 27.1%, to $187.3 million for the year ended
December 31, 2015 from $147.3 million for the year ended December 31, 2014. This increase was due to our continued success in
growing residential real estate, multifamily, commercial real estate loans, commercial, and consumer loans. The increase in average
balance of loans was partially offset by a 37 basis point decrease in yield, to 5.66% for the year ended December 31, 2015 from
6.03% for the year ended December 31, 2014, due to the continued payoff of higher-yielding loans and our originating new loans
in a lower interest rate environment.
Interest on investment
securities decreased $9,000 to $1.7 million of the year ended December 31, 2015. An increase in average balance of $2.7
million, or 3.6%, offset a 9 basis point decrease in yield on investment securities to 2.20% during the year ended December
31, 2015 from 2.29% for the year ended December 31, 2014. We have been able to use excess cash to originate loans that
provide higher interest rates than the rates we could receive on investment securities.
Interest Expense.
Interest
expense decreased $9,000, or 1.9%, to $457,000 for the year ended December 31, 2015 from $466,000 for the year ended December
31, 2014, caused by a decrease in interest expense on time deposits. The decrease in interest expense on time deposits is primarily
driven by lower average balances which decreased $2.6 million or 19.9% for the year ended December 31, 2015 from December 31,
2014.
Interest expense on deposits was
$431,000 and $437,000 for the years ended December 31, 2015 and 2014. However, our average balance of
interest-bearing deposits increased $15.7 million, or 9.1%, to $187.4 million for the year ended December 31, 2015 from
$171.7 million for the year ended December 31, 2014. The increase resulted from increases in the average balance of all
deposit categories, except for time deposits. The increase in our average balance of interest-bearing deposits was primarily
due to an increase savings, NOW, and money market accounts, which increased $18.3 million, or 11.5%, to $176.9 million for
the year ended December 31, 2015 from $158.6 million for the year ended December 31, 2014. However, the average interest rate
we paid on savings, NOW and money market accounts decreased 2 basis points to 0.20% for the year ended December 31, 2015 from
0.22% for the year ended December 31, 2014.
Our overall cost of funds for the
year ended December 31, 2015 was enhanced by an increase in average non-interest bearing deposits, which increased $23.6 million
to $95.8 million for the year ended December 31, 2015 from $72.2 million for the year ended December 31, 2014, as we have been
successful in obtaining non-interest bearing deposits from commercial loan customers as well as from our merchant services customers.
Net Interest Income.
Net
interest income increased $1.8 million, or 17.0%, to $12.0 million for the year ended December 31, 2015 from $10.2 million for
the year ended December 31, 2014.
Our net interest rate spread decreased
12 basis points to 3.64% for the year ended December 31, 2015 from 3.76% for the year ended December 31, 2014, while our net interest
margin decreased 12 basis points to 3.74% for the year ended December 31, 2015 from 3.86% for the year ended December 31, 2014.
The average yield we earned on interest-earning assets decreased, however, at the same time we were able to decrease the average
rate we paid on interest-bearing liabilities.
Provision for Loan Losses.
Our provision for loan losses was $930,000 for the year ended December 31, 2015 compared to $300,000 for the year ended
December 31, 2014. The provisions recorded resulted in an allowance for loan losses of $2.8 million, or 1.25% of total loans at
December 31, 2015, compared to $2.2 million, or 1.25% of total loans at December 31, 2014. The higher provision for loan losses
was a result of the growth in the loan portfolio and related impact to the allowance for loan losses.
Noninterest Income.
Noninterest income information is as follows:
Years
        Ended December 31,
Change
2015
2014
Amount
Percent
(Dollars
    in thousands)
Noninterest
    income
Customer related
    fees and service charges
$    741
$    471
$    270
57.3%
Merchant processing
    income
2,202
1,143
1,059
92.7
Gains on sales
    of securities
―
151
(151)
(100.0)
Total noninterest
    income
$  2,943
$  1,765
$  1,178
66.7%
Merchant processing income increased
significantly during the year due to significant growth in our business. Total active merchants as of December 31, 2015 were approximately
9,500 compared to approximately 6,500 active merchants as of December 31, 2014. Customer related fees and charges have increased
due to overall increases in the balances and count of our deposit customers.
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Table of Contents
Noninterest Expense.
Noninterest expense information is as follows.
Years
        Ended December 31,
Change
2015
2014
Amount
Percent
(Dollars
    in thousands)
Noninterest expense
Employee compensation and benefits
$    6,251
$    5,525
$      726
13.1%
Occupancy and equipment
1,412
1,774
(362)
(20.4)
Professional and consulting services
1,699
1,065
634
59.5
FDIC assessment
245
306
(61)
(19.9)
Advertising and marketing
334
367
(33)
(9.0)
Travel and business relations
301
296
5
1.7
OCC assessments
105
130
(25)
(19.2)
Data processing
1,187
1,103
84
7.6
Other operating expenses
637
696
(59)
(8.5)
Total noninterest expense
$   12,171
$  11,262
$      909
8.1%
Salaries and
employee benefits increased for the year ended December 31, 2015 from the year ended December 31, 2014 primarily due to increases
in employees, increases in incentive compensation tied to performance and salary increases. Professional and consulting expenses
increased primarily due to our charter conversions and corporate reorganization. Occupancy and equipment expense decreased primarily
due to the consolidation of our office facilities in New York City.
Income Tax Provision.
We recorded a provision for income taxes of
$664,000 for the year ended December 31, 2015, reflecting an effective tax rate of 36.2%, compared to $410,000 or an effective
tax rate of 90.9%, for the year ended December 31, 2014. The higher effective tax rate in 2014 was due to additional New York
state income tax expense to adjust our state deferred tax assets and liabilities using newly exacted New York state income tax
rates and apportionment changes.
Management of Market Risk
General
. The principal objective
of our asset and liability management function is to evaluate the interest rate risk within the balance sheet and pursue a controlled
assumption of interest rate risk while maximizing net income and preserving adequate levels of liquidity and capital. The board
of directors of our bank has oversight of our asset and liability management function, which is managed by our Asset/Liability
Management Committee. Our Asset/Liability Management Committee meets regularly review, among other things, the sensitivity of our
assets and liabilities to market interest rate changes, local and national market conditions and market interest rates. That group
also reviews our liquidity, capital, deposit mix, loan mix and investment positions.
As a financial institution, our primary component
of market risk is interest rate volatility. Fluctuations in interest rates will ultimately impact both the level of income and
expense recorded on most of our assets and liabilities, and the fair value of all interest earning assets and interest bearing
liabilities, other than those which have a short term to maturity. Interest rate risk is the potential of economic losses due to
future interest rate changes. These economic losses can be reflected as a loss of future net interest income and/or a loss of current
fair values. The objective is to measure the effect on net interest income and to adjust the balance sheet to minimize the inherent
risk while at the same time maximizing income.
We manage our exposure to interest rates
primarily by structuring our balance sheet in the ordinary course of business. We do not typically enter into derivative contracts
for the purpose of managing interest rate risk, but we may do so in the future. Based upon the nature of our operations, we are
not subject to foreign exchange or commodity price risk. We do not own any trading assets.
Net Interest Income Simulation.
We
use an interest rate risk simulation model to test the interest rate sensitivity of net interest income and the balance sheet.
Instantaneous parallel rate shift scenarios are modeled and utilized to evaluate risk and establish exposure limits for acceptable
changes in net interest margin. These scenarios, known as rate shocks, simulate an instantaneous change in interest rates and use
various assumptions, including, but not limited to, prepayments on loans and securities, deposit decay rates, pricing decisions
on loans and deposits, reinvestment and replacement of asset and liability cash flows.
64
Table of Contents
The following table presents the estimated changes
in net interest income of Esquire Bank, National Association, calculated on a bank-only basis, which would result from changes
in market interest rates over twelve-month periods beginning December 31, 2016 and 2015. The tables below demonstrate that we are
asset-sensitive in a rising interest rate environment.
At
    December 31,
2016
2015
Changes
    in
Interest Rates
(Basis Points)
Estimated
                                         12-
Months
                                         Net
Interest
Income
Change
Estimated
                                         12-
Months
                                         Net
Interest
Income
Change
(Dollars in thousands)
400
$
24,445
5,519
$
19,462
4,491
300
23,083
4,157
18,360
3,389
200
21,714
2,788
17,262
2,291
100
20,339
1,413
16,155
1,184
0
18,926
―
14,971
―
-100
17,260
(1,166
)
13,802
(1,169
)
-200
16,220
(2,706
)
13,017
(1,954
)
Economic Value of Equity Simulation.
We
also analyze our sensitivity to changes in interest rates through an economic value of equity ("EVE") model. EVE represents
the present value of the expected cash flows from our assets less the present value of the expected cash flows arising from our
liabilities adjusted for the value of off-balance sheet contracts. EVE attempts to quantify our economic value using a discounted
cash flow methodology. We estimate what our EVE would be as of a specific date. We then calculate what EVE would be as of the same
date throughout a series of interest rate scenarios representing immediate and permanent, parallel shifts in the yield curve. We
currently calculate EVE under the assumptions that interest rates increase 100, 200, 300 and 400 basis points from current market
rates, and under the assumption that interest rates decrease 100 and 200 basis points from current market rates.
The following table presents the estimated changes
in EVE of Esquire Bank, National Association, calculated on a bank-only basis, that would result from changes in market interest
rates as of December 31, 2016 and 2015.
At
    December 31,
2016
2015
Changes
    in
Interest Rates
(Basis Points)
Economic
Value
                                         of
Equity
Change
Economic
Value
                                         of
Equity
Change
(Dollars in thousands)
400
$
79,188
6,362
$
66,005
3,996
300
78,277
5,451
65,377
3,368
200
77,062
4,236
64,751
2,742
100
75,397
2,571
63,909
1,900
0
72,826
―
62,009
―
-100
65,985
(6,841
)
55,246
(6,763
)
-200
56,208
(16,618
)
46,863
(15,146
)
Many assumptions are used to calculate the impact
of interest rate fluctuations. Actual results may be significantly different than our projections due to several factors, including
the timing and frequency of rate changes, market conditions and the shape of the yield curve. The computations of interest rate
risk shown above do not include actions that our management may undertake to manage the risks in response to anticipated changes
in interest rates, and actual results may also differ due to any actions taken in response to the changing rates.
Liquidity and Capital Resources
Liquidity is the ability to meet current and
future financial obligations of a short-term nature. Our primary sources of funds consist of deposit inflows, loan repayments and
maturities and sales of securities. While maturities and scheduled amortization of loans and securities are predictable sources
of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition.
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We regularly review the
need to adjust our investments in liquid assets based upon our assessment of: (1) expected loan demand, (2) expected deposit flows,
(3) yields available on interest earning deposits and securities, and (4) the objectives of our asset/liability management program.
Excess liquid assets are invested generally in interest earning deposits and short- and intermediate-term securities.
Our most liquid assets are cash and cash equivalents.
The levels of these assets are dependent on our operating, financing, lending and investing activities during any given period.
At March 31, 2017 and December 31, 2016, cash and cash equivalents totaled $32.6 million and $43.0 million, respectively. Securities
classified as available-for-sale, which provide additional sources of liquidity, totaled $103.7 million at March 31, 2017 and $92.6
million at December 31, 2016.
At March 31, 2017, we had the ability to borrow
a total of $78.8 million from the Federal Home Loan Bank of New York. We also had an available line of credit with the Federal
Reserve Bank of New York discount window of $15.1 million. At March 31, 2017, we also had a $3.5 million and $4.0 million line
of credit with Atlantic Community Bankers' Bank and Zions Bank, respectively. No amounts were outstanding on any of the aforementioned
lines as of March 31, 2017.
At December 31, 2016, we had the ability to
borrow a total of $72.8 million from the Federal Home Loan Bank of New York. We also had an available line of credit with the Federal
Reserve Bank of New York discount window of $15.6 million. At December 31, 2016, we also had a $3.5 million and $4.0 million line
of credit with Atlantic Community Bankers' Bank and Zions Bank, respectively. No amounts were outstanding on any of the aforementioned
lines as of December 31, 2016.
We have no material commitments or demands that
are likely to affect our liquidity other than set forth below. In the event loan demand were to increase faster than expected,
or any unforeseen demand or commitment were to occur, we could access our borrowing capacity with the Federal Home Loan Bank of
New York or obtain additional funds through brokered certificates of deposit.
At March 31, 2017, we had $8.4 million in loan
commitments outstanding. We also had $1.3 million in standby letters of credit at March 31, 2017. At December 31, 2016, we had
$2.0 million in loan commitments outstanding. We also had $1.3 million in standby letters of credit at December 31, 2016.
Certificates of deposit due within one year
of March 31, 2017 totaled $19.9 million, or 5.2% of total deposits. Total certificates of deposit were $22.7 million or 5.9% of
total deposits. Certificates of deposit due within one year of December 31, 2016 totaled $22.3 million, or 6.0% of total deposits.
Total certificates of deposit were $24.0 million or 6.5% of total deposits.
Our primary investing activities are the origination,
and to a lesser extent purchase, of loans and the purchase of securities. During the three months ended March 31, 2017, we originated
or purchased $28.2 million of loans and $15.4 million of securities. During the three months ended March 31, 2016, we originated
or purchased $15.3 million of loans and purchased no securities. During the year ended December 31, 2016, we originated or purchased
$125.2 million of loans and $30.2 million of securities. During the year ended December 31, 2015, we originated or purchased $121.7
million of loans and we purchased $24.7 million of securities.
Financing activities consist primarily of activity
in deposit accounts. We experienced an increase in total deposits of $12.6 million and a decrease in total deposits of $3.2 million
for the three months ended March 31, 2017 and 2016, respectively. We experienced net increases in total deposits of $69.1 million
and $10.9 million for the years ended December 31, 2016 and 2015, respectively. We generate deposits from law firms, other local
businesses, and individuals through client referrals and other relationships and through our retail presence. We believe we have
a very stable core deposit base due primarily to the litigation market strategy as we strongly encourage and are generally successful
in having law firm borrowers maintain their entire banking relationship with us. The high level of transaction accounts is expected
to be maintained. We have established deposit concentration thresholds to avoid the possibility of dependence on any single depositor
base for funds. Since inception, we have not had the need to borrow significantly from the Federal Home Loan Bank of New York.
We have been able to use the cash generated from the increases in deposits to fund loan growth in recent periods.
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Esquire Bank, National Association is subject
to various regulatory capital requirements administered by Office of the Comptroller of the Currency, and the Federal Deposit Insurance
Corporation. At March 31, 2017 and December 31, 2016, Esquire Bank exceeded all applicable regulatory capital requirements, and
was considered "well capitalized" under regulatory guidelines. See Note 14 of the Notes to the Consolidated Financial
Statements for additional information.
The net proceeds from the stock offering will
significantly increase our liquidity and capital resources. Over time, the initial level of liquidity will be reduced as net proceeds
from the stock offering are used for general corporate purposes, including the funding of loans. Our financial condition and results
of operations will be enhanced by the net proceeds from the stock offering, resulting in increased net interest earning assets
and net interest income. However, due to the increase in equity resulting from the net proceeds raised in the stock offering, as
well as other factors associated with the stock offering, our return on equity will be adversely affected following the stock offering.
We manage our capital to comply with our internal
planning targets and regulatory capital standards administered by the OCC. We review capital levels on a monthly basis. At March
31, 2017 and December 31, 2016, Esquire Bank was classified as well-capitalized.
On November 2, 2012, the OCC notified Esquire
Bank that it had established minimum capital ratios for Esquire Bank requiring Esquire Bank to maintain, commencing December
1, 2012, a Tier 1 leverage capital ratio of 9.0%, a Tier1 risk-based capital ratio of 11.0% and a total risk-based capital to
risk-weighted assets ratio of 13.0%.
The following table presents our capital ratios
as of the indicated dates for Esquire Bank.
"Well Capitalized"
For Capital Adequacy
Purposes
Minimum Capital with
Conservation Buffer
OCC
Minimum Capital
Ratios
Actual
At March 31, 2017
Tier 1 Leverage Ratio
Bank
5.00
%
4.00
%
9.00
%
11.60
%
Tier 1 Risk-based Capital Ratio
Bank
8.00
%
7.25
%
11.00
%
15.46
%
Total Risk-based Capital Ratio
Bank
10.00
%
9.25
%
13.00
%
16.59
%
Common Equity Tier 1 Capital Ratio
Bank
6.50
%
5.75
%
N/A
15.46
%
"Well Capitalized"
Actual
At December 31, 2016
Actual
At December
    31, 2015
Tier 1 Leverage Ratio
Bank
5.00
%
11.63
%
11.90
%
Tier 1 Risk-based Capital Ratio
Bank
8.00
%
16.09
%
15.91
%
Total Risk-based Capital Ratio
Bank
10.00
%
17.25
%
17.06
%
Common Equity Tier 1 Capital Ratio
Bank
6.50
%
16.09
%
15.91
%
Basel III revised the capital adequacy requirements
and the Prompt Corrective Action Framework effective January 1, 2015 for Esquire Bank. When fully phased in on January 1, 2019,
the Basel Rules will require Esquire Bank to maintain a 2.5% "capital conservation buffer" on top of the minimum risk-weighted
asset ratios. The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions
with a (i) CET1 to risk-weighted assets, (ii) Tier 1 capital to risk-weighted assets or (iii) total capital to risk-weighted assets
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above the respective minimum but below the capital conservation
buffer will face constraints on dividends, equity repurchases and discretionary bonus payments to executive officers based on the
amount of the shortfall. The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level and
will increase by 0.625% on each subsequent January 1, until it reaches 2.5% on January 1, 2019.
Contractual Obligations and Off-Balance Sheet Arrangements
Contractual Obligations.
In the
ordinary course of our operations, we enter into certain contractual obligations. The following table presents our contractual
obligations as of March 31, 2017 and December 31, 2016.
Contractual Maturities as of March 31, 2017
Less Than One
Year
More Than One
Year Through
Three Years
More Than Three
Years Through Five
Years
Over Five
Years
Total
(In thousands)
Operating lease obligations
$
480
$
792
$
833
$
2,117
$
4,222
Time deposits
19,862
2,825
—
—
22,687
Total
$
20,342
$
3,617
$
833
$
2,117
$
26,909
Contractual
    Maturities as of December 31, 2016
Less
    Than One
Year
More
    Than One
Year Through
Three Years
More
    Than Three
Years Through
Five Years
Over
    Five
Years
Total
(In thousands)
Operating lease obligations
$
489
$
796
$
828
$
2,222
$
4,335
Time deposits
22,335
1,620
—
—
23,955
Total
$
22,824
$
2,416
$
828
$
2,222
$
28,290
Off-Balance Sheet Arrangements.
We
are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of
our customers. These financial instruments include commitments to extend credit, which involve elements of credit and interest
rate risk in excess of the amount recognized in the consolidated balance sheets. Our exposure to credit loss is represented by
the contractual amount of the instruments. We use the same credit policies in making commitments as we do for on-balance sheet
instruments.
For further information, see Note 11 of the
Notes to the December 31, 2016 Consolidated Financial Statements.
Effect of Inflation and Changing Prices
The consolidated financial statements and related
financial data included in this prospectus have been prepared in accordance with generally accepted accounting principles in the
United States of America, which require the measurement of financial position and operating results in terms of historical dollars
without considering the change in the relative purchasing power of money over time due to inflation. The primary impact of inflation
on our operations is reflected in increased operating costs. Unlike most industrial companies, virtually all the assets and liabilities
of a financial institution are monetary in nature. As a result, interest rates generally have a more significant impact on a financial
institution's performance than do general levels of inflation. Interest rates do not necessarily move in the same direction
or to the same extent as the prices of goods and services.
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BUSINESS
Overview
We are a bank holding company headquartered
in Jericho, New York and registered under the BHC Act. Through our wholly owned bank subsidiary, Esquire Bank, National Association,
we are a full service commercial bank dedicated to serving the financial needs of the legal and small business communities on a
national basis, as well as commercial and retail customers in the New York metropolitan market. We offer tailored products and
solutions to the legal community and their clients as well as dynamic and flexible merchant services solutions to small business
owners, both on a national basis. We also offer traditional banking products for businesses and consumers in our local market area
(a subset of the New York metropolitan market). We believe these activities, primarily anchored by our legal community focus, generate
a stable source of low cost core deposits and a diverse asset base to support our overall operations. Our commercial and consumer
loans tailored to the litigation market enhance our overall yield on our loan portfolio, enabling us to earn attractive risk-adjusted
net interest margins. Additionally, our merchant processing activities generate a relatively stable source of fee income. We believe
our unique and dynamic business model distinguishes us from other banks and non-bank financial services companies in the markets
in which we operate as demonstrated by comparing our performance metrics for the three months ended March 31, 2017 and 2016 as
well as our year ended 2016 and 2015.
For the three months ended March 31, 2017 and
2016:
·
Our net income increased 26.8% to $815,000 or $0.16 per diluted share.
·
We had a net interest margin of 4.23%, stabilized by a low cost of
funds of 0.15% on our core deposits.
·
Our loans increased 23.0%, or $54.3 million, to $290.6 million, with
no non-performing loans and solid asset quality metrics.
·
Our noninterest income increased 22.0% to $1.2 million, which represented
21.9% of our total revenue for the three months ended March 31, 2017, primarily driven by our merchant services platform.
·
As of March 31, 2017, our total assets, loans, deposits and stockholders'
equity totaled $438.1 million, $290.6 million, $383.4 million and $53.2 million, respectively.
For the years ended December 31, 2016 and 2015:
·
Our net income increased 140.8% to $2.8 million or $0.55 per diluted
share.
·
We had a net interest margin of 4.25%, an increase from 3.74%, stabilized
by a low cost of funds of 0.16% on our core deposits.
·
Our loans increased 24.1%, or $54.1 million, to $278.6 million, with
no non-performing loans and solid asset quality metrics.
·
Our noninterest income increased 40.2% to $4.1 million, which represented
20.9% of our total revenue at December 31, 2016, primarily driven by our merchant services platform.
·
As of December 31, 2016, our total assets, loans, deposits and stockholders'
equity totaled $424.8 million, $278.6 million, $370.8 million and $52.2 million, respectively.
Both 2015 and 2016 were transformational years
for the Company due in part to the successful execution of our unique and dynamic business model. We believe our ongoing commitment
to the litigation and small business communities have been, and should continue to be, the foundation for our success. In August
2015, we closed our private placement offering of our common stock and preferred stock that began in 2014, raising net proceeds
of $17.2 million and successfully converted Esquire Financial Holdings, Inc. and Esquire Bank from a savings and loan holding company
and savings bank to a bank holding company and national bank, respectively. We believe that the
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additional capital, coupled with the conversion to a national bank,
has and should continue to enhance our commercial loan growth in the legal industry and business communities we serve.
We remain true to our commitment to serve the
litigation community and our commercial customers through our tailored and innovative products and solutions. We believe Esquire
Bank's approach to the legal community is simple yet effective
–
we listen to the customer's needs and
tailor products and services around those needs. Our management team includes attorneys and bankers who have serviced the legal
community throughout their careers, which is a differentiating factor and key to our robust attorney network. This model continues
to set us apart from other institutions that offer a "one product fits all" model. Our relationships within the litigation
community are a key contributor to our loan growth, strong loan yields, and low cost core deposits. The litigation community represented
more than 70% of our deposit base at March 31, 2017. In addition to our lending activities, we have also remained steadfast in
growing our merchant services platform. We provide dynamic and flexible merchant services solutions to small business owners. Our
merchant services platform has grown to approximately 13,000 small businesses at March 31, 2017, which generated most of our noninterest
income and represented 21.9% of our revenue for the three months ended March 31, 2017 and 20.9% of our revenue for the year ended
December 31, 2016. We believe merchant services represents a significant opportunity for future growth in fee income, core deposits
and enhanced lending opportunities.
Our low cost core deposits (deposits, excluding
time deposits), representing our primary funding source for loan growth, totaled $360.7 million at March 31, 2017 resulting in
a total cost of funds of 0.15%. These stable low cost funds are driven by our attorney operating and escrow deposits, representing
more than 70% of our total deposit base at March 31, 2017. We intend to continue to prudently manage growth in deposits, utilizing
customer sweep programs for our mass tort and class action business banking programs. We do not have traditional "brick and
mortar" branches to support our deposit growth. Instead, we rely on our robust attorney network to gather deposits and our
customers utilize on-line cash management technology to manage their operating and escrow accounts as well as their business banking
needs across the country. We believe the lack of branch infrastructure coupled with our strong net interest margin and growth will
continue to drive our efficiency ratio below the 73% reported for the three months ended March 31, 2017.
With
a growing and generally unseasoned loan portfolio, our credit risk may continue to increase and our future performance could be
adversely affected; however, we have invested in and developed underwriting and credit management processes tailored to each of
the products we offer in order to minimize these risks. We are committed to continuing to invest in and develop our underwriting
and credit management processes to ensure our asset quality remains high and we minimize our credit risk. At March 31, 2017, the
average age of our loan portfolio was 2.10 years and we currently do not have any non-performing loans. See "Risk Factors—Our
loan portfolio is unseasoned," beginning on page 17.
Esquire Bank was originally chartered in 2006.
Esquire Financial Holdings, Inc. became our holding company in 2010. Our principal executive offices are located at 100 Jericho
Quadrangle, Suite 100, Jericho, New York 11753, and our telephone number at that address is (800) 996-0213.
Our Business Strategy
Esquire Bank has positioned itself as a unique
provider of financial services and products to the legal community, developing a strong brand and reputation with attorneys and
their firms. The legal community we serve consists of law firms that litigate mass torts, class actions, commercial, employment,
product liability, personal injury and other litigation cases, as well as individual attorneys and their clients (plaintiffs involved
in the litigation who are the recipients of the settlements or judgments). According to the Towers Watson 2011 Update on U.S. Tort
Cost Trends, the U.S. tort system paid out $264.6 billion in commercial and personal tort costs in 2010. The same report states
that "since 1950, growth in tort costs [commercial and personal] has exceeded growth in GDP by an average of approximately
two percentage points." However, tort cost growth has generally lagged GDP growth in the last five years covered by the Towers
Watson report and the Company has not conducted any independent research to determine if the value of tort actions in 2010 remains
indicative of the value of tort actions in 2017.
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Law firms are typically compensated on a contingent
basis based on a percentage of the gross settlement amounts, ranging from 20%-40% of the gross settlement. This market has traditionally
been fragmented with deposit services offered by banks and lending services offered by finance companies (non-FDIC insured entities).
Since commencing operations, we have leveraged
the strong business relationships that our founders, directors, stockholders, customers and managers have in the legal community,
creating a unique distribution network. We have had certain informal affiliations with numerous national and state trial associations,
including but not limited to the American Association of Justice (AAJ), the New York State Trial Lawyers Association (NYSTLA),
the Consumer Attorneys of California (CAOC), the Florida Association of Justice (FAJ) and the Pennsylvania Association for Justice
(PAJ). These organizations represent licensed trial attorneys across their states and nationwide. These informal affiliations,
coupled with our strong business relationships, should help to raise awareness of Esquire Bank's products and services throughout
the legal community. Our goal is to position Esquire Bank as the premier "one stop" financial services firm for the
legal community. We believe we are one of the few banks in the United States that specifically supports and has the expertise to
understand the specialized financial services needs of this legal community, and have developed commercial and consumer loan products
and services to meet these needs. We provide specialized lending and depository services to participants in the litigation industry
on a national basis, including:
·
Plaintiff law firms - single event, mass tort, class action and worker's compensation firms.
·
Non-bank trustees - claims administrators, third party administrators and lien resolution firms administering mass tort or
class action settlements on behalf of the courts, court orders, plaintiff and/or defendant counsel.
·
Consumers - claimants in single event, mass tort and class action lawsuits as well as employees and partners of the law firms.
In addition to our lending capabilities, in
2012 we entered into the merchant services business as an acquiring bank and hired a senior manager with over 35 years of experience
to lead that business. As a Visa and MasterCard member, we provide merchant services for small businesses located throughout the
United States through relationships with third party ISOs. ISOs provide a source of protection against merchant losses through
contractual liability for the acts and omissions of the merchants. These liabilities can be satisfied from ISO and/or merchant
reserves and monthly residual payments due to the ISO that are maintained at Esquire Bank. To date, Esquire Bank has not incurred
any losses from its merchant services activities. We entered into the merchant processing business to diversify and strengthen
our revenue stream by increasing noninterest income and to provide cross selling opportunities for other business banking products
and services. For the three months ended March 31, 2017, merchant processing revenues were approximately $838,000 million representing
most of our noninterest income, which was 21.9% of our total revenue. For the year ended December 31, 2016, merchant processing
revenues were approximately $2.9 million representing most of our noninterest income, which was 20.9% of our total revenue. At
March 31, 2017, we serviced approximately 13,000 small businesses, and for the three months ended March 31, 2017, we processed
$787.7 million in card volume. We intend to continue to expand our merchant processing business.
Finally, we offer traditional commercial and
consumer lending and depository products in the New York metropolitan area with a focus on commercial, commercial real estate,
multifamily and 1-4 family residential loans. We control credit risk through both disciplined underwriting as well as active credit
management processes and procedures.
Lending Activities
Our strategy is to maintain a loan portfolio
that is broadly diversified by type and location. Within this general strategy, we intend to focus our growth in Attorney-Related
Loans, which include commercial and consumer lending to attorneys, law firms and plaintiffs/claimants where we have expertise
and market insights. As of March 31, 2017, these product lines in aggregate totaled $106.4 million (or 36.8% of our loan portfolio).
As of March 31, 2017, our Commercial Attorney-Related Loans, which consist of working capital lines of credit, case cost lines
of credit, term loans and post-settlement commercial and other commercial attorney-related loans, totaled $101.2 million, or 95.1%
of our total attorney-related loan portfolio and 35.0% of our loan portfolio. As of March 31, 2017, our
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Consumer Attorney-Related
Loans, which consist of post-settlement consumer loans and structured settlement loans, totaled $5.3 million, or 4.9% of our total
Attorney-Related Loan portfolio and 1.8% of our loan portfolio. With respect to our Attorney-Related Loan portfolio, we seek out
customers on a nationwide basis.
The following table sets forth the composition
of our Attorney-Related Loan portfolio by type of loan at the dates indicated.
March
    31, 2017
December
    31, 2016
December
    31, 2015
Amount
Percent
Amount
Percent
Amount
Percent
(Dollars in thousands)
Attorney-Related Loans
Commercial Attorney-Related:
Working capital lines of credit
$
68,985
68.17
%
$
63,251
66.61
%
$
51,433
66.64
%
Case cost lines of credit
21,692
21.44
21,132
22.26
17,574
22.77
Term loans
9,571
9.46
9,675
10.19
7,358
9.53
Post-settlement commercial and other commercial attorney-related loans
946
0.93
894
0.94
819
1.06
Total Commercial Attorney-Related
101,194
100.00
%
94,952
100.00
%
77,184
100.00
%
Consumer Attorney-Related:
Post-settlement consumer loans
3,703
70.47
%
3,078
65.35
%
6,653
78.44
%
Structured settlement loans
1,552
29.53
1,632
34.65
1,829
21.56
Total Consumer Attorney-Related
5,255
100.00
%
4,710
100.00
%
8,482
100.00
%
Total Attorney-Related Loans
$
106,449
100.00
%
$
99,662
100.00
%
$
85,666
100.00
%
At March 31, 2017, approximately 56% of the
total Attorney-Related Loans outstanding had been extended to customers in New York followed by 13% extended to customers in Texas.
Our current Loan Policy limits the percentage of out-of-state loans to 25% per loan type in any one state other than New York.
As of March 31, 2017, our total real estate
loans, which consist of 1-4 family loans, commercial real estate loans, multifamily loans and construction loans, totaled $165.6
million (or 57.2% of our loan portfolio). The majority of our real estate secured loans are in the areas surrounding the New York
metropolitan area. We anticipate continuing to focus on the commercial and personal credit needs of businesses and individuals
in these markets.
The following is a discussion of our major types
of lending activity:
Commercial Loans and Lines of Credit ("Commercial").
Commercial loans are originated to local small to mid-size businesses to provide short-term financing for inventory, receivables,
the purchase of supplies, or other operating needs arising during the normal course of business and loans made to our qualified
merchant customers. In addition, specialized and tailored commercial loans are offered to attorneys and law firms nationally. At
March 31, 2017, commercial loans (excluding Commercial Attorney-Related Loans of $101.2 million) totaled $11.6 million (or 4.0%
of total loans). All commercial loans are originated internally and represented 39.0% of our total loans at March 31, 2017.
Commercial Attorney-Related Loans.
The
following is a summary of the specialized commercial loan products we offer to meet the needs of the litigation community. Commercial
Attorney-Related Loans are made to attorneys and law firms and the outstanding loan balances are included in the loan balance for
commercial loans as noted above. A unique aspect of our underwriting involves advances of loan proceeds against a "borrowing
base," which typically consists of the inventory of litigation cases for the firm. We complement this with traditional commercial
underwriting. See "—Credit Risk Management" below. Generally, the maximum amount a customer may borrow at any
time is fixed as a percentage of the borrowing base outstanding at any time.
§
Working Capital Lines of Credit ("WC LoC").
WC LoCs are unsecured business lines of credit
offered to law firms for general corporate purposes, including meeting cash flow needs, advertising, financing the purchase of
fixed assets, or other reasons. The balance of such loans was $69.0 million at March 31, 2017 (or 64.8% of total Attorney-Related
Loans).
§
Case Cost Lines of Credit.
Case Cost Lines of Credit ("Case Cost LOC") are unsecured business
lines of credit that are tied to the costs of contingency cases and totaled $21.7 million at March 31,
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2017 (or 20.4% of total Attorney-Related Loans). Contingency
case costs include court filing fees, investigative costs, expert witness fees, deposition costs, and other costs. Recovery of
case costs is derived from gross settlement proceeds from the settled case. In our experience, an average case can take two to
four years to litigate and law firms are prevented from charging their clients any interest for the out-of-pocket litigation costs,
which amounts to an interest-free loan provided to the client. Thus, instead of using the law firm's cash flow, law firms
use Case Cost LOCs to finance litigation cash flows because the finance charges can be charged against the settlement proceeds.
Case Cost LOCs are not contingent loans, meaning that their repayment is not dependent on a favorable case settlement. In the event
of an unfavorable outcome for the borrower, the loans are repaid from the cash flows of the law firm.
§
Term Loans.
Term loans are short-term unsecured business loans originated to law firms for general corporate
purposes such as the purchase of equipment or enhancing operational facilities. These loans are offered to law firms at the same
terms as those offered to other types of businesses. Term loans to law firms totaled $9.6 million at March 31, 2017 (or 9.0% of
total Attorney-Related Loans).
§
Post-Settlement Commercial and Other Commercial Attorney-Related Loans.
Post-settlement commercial loans
are bridge loans secured by proceeds from non-appealable, settled cases. Other commercial attorney-related loans
consist
of both secured and unsecured loans to law firms and attorneys. Post-settlement commercial and other commercial attorney-related
loans totaled $950,000 at March 31, 2017 (or 0.9% of total Attorney-Related Loans).
Consumer Loans.
Consumer loans
are primarily post-settlement consumer and structured settlement loans made to plaintiffs and claimants as described below.
Consumer loans are also originated to individuals for debt consolidation, home repairs, home improvement or major consumer purchases.
Consumer loans are both secured and unsecured. At March 31, 2017, total consumer loans were $11.0 million (or 3.8% of total loans).
We believe that our post-settlement consumer loans to claimants should increase based upon recent mass tort settlements including,
but not limited to, the World Trade Center Victims Compensation Fund (VCF), the NFL Concussion case (NFL) and Transvaginal Mesh
litigation matters (TVM).
The following is a summary of the specialized
Consumer Attorney-Related Loan products we offer to meet the needs of the litigation market. Consumer Attorney-Related Loans, which
consist of post-settlement consumer and structured settlement loans, are consumer loans made to individual plaintiffs/claimants
and the outstanding loan balances are included in the loan balance for consumer loans as noted above.
§
Post-Settlement Consumer Loans.
Post-settlement consumer loans are generally bridge loans to individuals secured
by proceeds from settled cases. These loans generally meet the "life needs" of claimants in various litigation matters
due to the delay between the time of settlement and actual payment of the settlement. These delays are primarily due to various
administrative matters in the case. The balance of post-settlement consumer loans to individuals was $3.7 million at March 31,
2017.
§
Structured Settlement Loans.
Structured settlement loans are structured such that the annuity provider (a highly
rated insurance company) is directed by the court, at the request of the borrower, to deposit the borrower's payments into
an account designated by us. Loan payments are then automatically deducted from the annuity payment. At March 31, 2017, structured
loans in our loan portfolio totaled $1.6 million.
Real Estate Loans.
The majority
of our real estate secured loans are in the areas surrounding the New York metropolitan area.
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Multifamily.
Multifamily loans
are the largest component of the real estate loan portfolio and totaled $92.8 million (or 32.0% of total loans) at March 31, 2017.
The multifamily loan portfolio consists of loans secured by apartment buildings and mixed-use buildings (predominantly residential
income producing) in our primary market area. We originate and purchase multifamily loans. Whether originated or purchased, all
loans are independently underwritten by Esquire Bank utilizing the same underwriting criteria and approved by the Directors Loan
Committee or in accordance with our Board established approval authorities.
1-4 Family Residential.
Mortgage
loans are primarily secured by 1-4 family cash flowing investment properties ($47.6 million as of March 31, 2017) in our market
area. The residential mortgage loan portfolio includes 1-4 family investment properties, primary and secondary owner occupied residences,
investor coop and condos. The majority of residential mortgages are originated internally, although we do purchase residential
mortgages from time to time. Purchased loans are subject to all the asset quality and documentary precautions normally used when
originating a loan.
Commercial Real Estate ("CRE").
CRE loans totaled $21.3 million (or 7.4% of total loans) at March 31, 2017 and consisted primarily of loans secured by hospitality
properties (53.1% of the CRE portfolio), mixed use properties (27.0% of the CRE portfolio) and warehouses (8.1% of the CRE portfolio),
with the remainder comprised of condo associations and office/retail properties. Owner-occupied loans represented 21.9% of the
CRE portfolio at March 31, 2017. We both originate and purchase CRE loans. All loans are independently underwritten by us utilizing
the same underwriting criteria, and approved by the Directors Loan Committee.
Construction Loans.
Construction
loans are originated on an opportunistic basis and totaled $4.1 million (or 1.4% of total loans) at March 31, 2017.
Merchant Services Activities
We provide merchant services as an acquiring
bank through the third-party or ISO business model in which we process credit and debit card transactions on behalf of merchants.
This model is designed to shift some of the risk from merchant losses resulting from chargebacks, fraud, non-compliance issues
or even insolvency to the ISO. In an ISO model, the bank and the ISO jointly enter into the merchant agreement with each merchant.
We believe that this model provides an added layer of protection against losses from merchants since losses that are not absorbed
by a merchant would be the liability of the ISO payable from reserves posted by the ISO or other funds the bank owes to the ISO.
Even with this recourse, Esquire Bank is ultimately liable for losses from actions of merchants and those of ISOs.
We entered into the merchant processing business
as an acquiring bank in 2012 in an effort to increase our noninterest income revenue and to provide cross selling opportunities
for other business banking products and services. For the three months ended March 31, 2017, merchant processing revenues were
approximately $838,000 and represented most of our noninterest income, which was 21.9% of our total revenue and represented an
increase of 11.3% over the three months ended March 31, 2016. For the year ended December 31, 2016, merchant processing revenues
were approximately $2.9 million and represented most of our noninterest income, which was 20.9% of our total revenue and represented
an increase of 33.5% over the comparable prior year period. At March 31, 2017, we had agreements with 17 ISOs, we serviced approximately
13,000 merchants, and for the three months ended March 31, 2017, we processed $787.7 million in card volume. We intend to continue
to expand our merchant processing business.
Under the ISO model, Esquire Bank and the ISO
determine the appropriate amount of merchant reserves, which is generally based on the nature of the merchant's business,
its chargeback and refund history, processing volumes and the merchant's financial health. The ISO performs an underwriting
and risk management review, although Esquire Bank itself also reviews and underwrites every application and performs separate risk
monitoring and management to ensure conformance with Esquire Bank's internal underwriting policies. As of December 31, 2016,
we had contractual arrangements with three payment processors or clearing agents, TSYS, JetPay and TriSource, which are utilized
by Esquire Bank and our ISOs to authorize, process and obtain settlement for card transactions.
We believe that the growth prospect in the U.S.
consumer payments processing market continues to be attractive. According to the Nilson Report, total estimated U.S. Visa, MasterCard,
Discover, PayPal and American
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Express ("Card Brand") payment volume reached nearly
$5 trillion in 2015. U.S. consumer spending through electronic payment methods continues to be very strong. The Card Brand aggregate
volume has been consistently growing at a 9% CAGR for the past five years. We believe that this increase in volume is attributable
to electronic payments having multiple growth avenues, including, but not limited to, organic growth (inflation and GDP), increased
consumer usage and increased merchant acceptance. In the U.S., the top 100 merchants make up less than 3.5% of the merchant outlets
and less than 5% of the net revenue to merchant acquiring companies. Based upon the above information, we believe that our noninterest
income generated from merchant services has the potential for continued growth.
We have implemented a comprehensive risk mitigation
program for our merchant services business which includes detailed policies and procedures applicable to both ISOs and merchants
pertaining to due diligence, risk and underwriting and Bank Secrecy Act compliance, among other things. Our Merchant Acquiring
and Risk Policy establishes authorities and guidelines for the Bank to acquire merchant servicing arrangements with ISOs, agent
banks, direct merchants and through merchant portfolio acquisitions. Such guidelines include initial and ongoing due diligence
requirements and approval authorities. All merchants, regardless of how the merchant is acquired, must meet our Merchant Credit/Underwriting
Policy requirements. In addition, credit approval requirements and authorities for approving merchants and ISOs are clearly defined
in our Merchant Acquiring and Risk Policy.
Our Merchant Acquiring and Risk Policy establishes
stringent requirements related to the due diligence conducted initially and on an ongoing basis, requirements for the ISO contract,
our responsibilities and the ISO's responsibilities in connection with the sponsorship and other matters. In the event of
a potential loss and in accordance with the terms of the ISO Merchant Agreement, we can take the following actions to collect:
charge the merchant account; charge the merchant reserve account; charge the ISO reserve account; deduct from the ISO monthly residual
on an ongoing basis until fully recovered; and recover through chargeback insurance, which is required for high-risk merchants.
As of March 31, 2017, we did not have any high-risk merchants.
In exchange for the liabilities and costs assumed
by ISOs, we receive reduced revenue on our merchant servicing portfolio than direct merchant service providers that do not obtain
such indemnification and administrative support. For the year ended December 31, 2016, we received a blended rate of approximately
eight basis points for merchant processing, and for the three months ended March 31, 2017, we received a blended rate of approximately
ten basis points for merchant processing, compared to direct merchant service providers that may receive two to three times that
rate for a portfolio with similar risk characteristics. However, we believe that our acquiring bank model represents less risk
for Esquire Bank.
Deposit Funding
Deposits are our primary source of funds to
support our earning assets and growth. We offer depository products, including checking, savings, money market and certificates
of deposit with a variety of rates. Deposits are insured by the FDIC up to statutory limits. Our unique low cost core deposit model
is primarily driven by escrow and operating accounts from law firms and other litigation settlements on a national basis, representing
more than 70% of $383.4 million in total deposits at March 31, 2017. Our core deposits (excluding time deposits) represent 94.1%
and our cost of funds on this stable funding source is 0.15%, anchored by our noninterest bearing demand deposits and attorney
escrow funds representing 34.8 and 37.6%, respectively, of total deposits. We require deposit balances associated with our commercial
loan arrangements and cash management relationships maintained by our commercial lending. We do not use traditional "brick
and mortar" branches to support our deposit growth and have only one branch, in Garden City, New York. The vast majority
of our customers utilize our on-line cash management technology to manage their operating and escrow accounts across the country.
The lack of a physical branch infrastructure and related costs coupled with our strong net interest margin, stable funding sources
and growth will continue to drive our efficiency ratio below the 73% reported at March 31, 2017. We continue to experience significant
growth in our mass tort business banking with off-balance sheet sweeps totaling $198.6 million at March 31, 2017.
Deposits have traditionally been our primary
source of funds for use in lending and investment activities and we do not utilize borrowings as a significant funding source.
Besides generating deposits from law firms and litigation settlements, we also generate deposits from our merchant services platform
and other local businesses,
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individuals through client referrals and other relationships and
through our single retail branch. We believe we have a very stable core deposit base due primarily to the litigation market strategy
as we strongly encourage and are successful in having law firm borrowers maintain their operating and escrow banking relationship
with us. Our low cost of funds is due to our deposit composition consisting of approximately 94.1% in transaction accounts at March
31, 2017. Our deposit strategy primarily focuses on developing borrowing and other service orientated relationships with customers
rather than competing with other institutions on rate. We have established deposit concentration thresholds to avoid the possibility
of dependence on any single depositor base for funds.
Our Competitive Strength
We attribute our success to the following competitive
strengths:
Unique Distribution Network in Scalable
Industries.
We have developed a unique niche in the legal industry which represented $264.6 billion in commercial and personal
tort costs in 2010. We believe that our unique distribution network within the legal industry is derived from decades of experience
anchored by our founders, board of directors, stockholders, officers, customers and our affiliations with both state and national
trial associations. The legal community is our primary engine for current and future growth in low cost core deposits, commercial
loans and consumer loans. We believe the litigation industry has significant growth potential for us across the lending and depository
spectrum, as we represent a small portion of the total tort settlement market for each year that we have been in operations. While
we do face significant competition for Attorney-Related Loans, derived primarily from eight to ten nationally-oriented financial
companies that specialize in the litigation industry, we believe our knowledge of the litigation industry, our competitive rates
on loans and our ability to offer national, uniform deposit products, set us apart. Also, through our merchant services solutions
to small business owners, we processed approximately $3.6 billion in merchant transaction volume for the year ended December 31,
2016 and $787.7 million for the three months ended March 31, 2017. We believe we have the platform and the capacity to continue
to grow our merchant services business.
Scalable Product Platforms Positioned
for Growth.
We have invested in people, processes and procedures in order to facilitate the recent growth in our key product
lines and position such product lines for additional growth in the future. We hired experienced management to establish unique
product lines, which have only recently become profitable on a run rate basis. We believe these unique product lines have significant
remaining growth potential. We also believe that the scalable platforms created by these investments position us for substantial
growth in our key product lines and have laid the groundwork for our ability to operate as a larger financial institution.
Diversified and Stable Business Model.
The combination of our higher margin legal community focus for commercial banking (commercial loans, claimant/consumer loans and
core low cost deposits), fee-based small business focus in merchant services and our community banking focus in the New York metropolitan
area (commercial real estate and residential income producing lending) allows us to grow in varied economic conditions and business
cycles. Our merchant services platform is intended to provide a stable fee based income and a platform for small business loan
and deposit growth. Our New York metropolitan commercial real estate portfolio has historically provided a stable lending base
in our local market. Our commercial product lines enhance the overall yield of our loan portfolio and are offered on a nationwide
basis, helping us to mitigate our exposure to stagnant loan demand or yield compression in our community banking market. This model
also provides asset diversity and favorable cost of funds, especially when competing against the wholesale banks and non-bank finance
companies that offer similar commercial finance products. However, substantially all of our real estate loans and a majority of
our Attorney-Related Loans are concentrated in the New York metropolitan area and if negative economic conditions develop in the
United States as a whole or our New York market, we could experience higher delinquencies and loan charge-offs, which would reduce
our net income and adversely affect our financial condition.
Focused Risk Mitigation Practices.
We have developed underwriting and credit management processes tailored to each of the products we offer, allowing us to construct
a diversified asset portfolio including specialized markets not typically served by community banks. We believe that our industry
experience and product knowledge has allowed us to develop processes, procedures and structural features in connection with offering
specialized products that enable us to appropriately identify and mitigate the risks associated with these products and services.
We
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intend to increase our originations of commercial loans, including
working capital lines of credit, case cost lines of credit, term loans to law firms, and post-settlement commercial and other commercial
attorney-related loans and these loans generally have more risk than 1-4 family residential mortgage loans and commercial loans
secured by real estate. However, we are focused on continuing to invest in our risk mitigation practices and leveraging our product
knowledge to ensure we minimize these credit risks while we continue to grow our loan portfolio.
Experienced Management Team.
Our
leadership team consists of senior managers with an average of over 20 years of experience in the banking and non-banking financial
services industries. The majority of our senior managers come from multi-billion dollar financial institutions. We believe the
experience, relationships, and entrepreneurial culture of our management team as well as our Board of Directors have been and will
continue to be key drivers of our growth. Our key leadership team includes:
·
Dennis Shields, Executive Chairman of the Board
. Mr. Shields
is the Executive Chairman of the Board of Directors and was a founding organizer of Esquire Bank. Since its inception in 2000,
Mr. Shields has also served as Chief Executive Officer of Plaintiff Funding Corp. (dba LawCash), a New York-based specialty finance
company that provides financial services products to law firms and claimants. Since 2014, Mr. Shields has served as the Chairman
at YieldStreet, an online platform for alternative investments and he is also the Chairman of Keeps America, a company that works
with law firms, disability advocates, and third-party administrators to distribute settlement awards and government benefits to
clients through its prepaid card. Mr. Shields served as a lay member of the Grievance Committee to the Second and Eleventh Judicial
Departments appointed by presiding judge from 1996 to 2004 and previously served on the New York State Health Information and Quality
Improvement Committee. Mr. Shields has authored two books and is a frequent speaker in both the legal and finance community.
·
Andrew C. Sagliocca, President, Chief Executive Officer and Director
. 
Mr. Sagliocca served as the Company's Chief Financial Officer when he joined Esquire Bank in February 2007. He became the
Chief Executive Officer in January 2009. Prior to joining Esquire Bank, Mr. Sagliocca was Senior Vice President and Corporate Controller
of North Fork Bank from 1999 to 2007. Mr. Sagliocca has more than 27 years of experience in the financial services industry.
·
Eric S. Bader, Executive Vice President, Chief Financial Officer
and Treasurer
.  Prior to his appointment as Executive Vice President in February 2011, Mr. Bader served as our Senior
Vice President, Chief Financial Officer and Treasurer since January 2009. Prior to this, Mr. Bader served as Esquire Bank's
Senior Vice President and Treasurer, since joining Esquire Bank in January 2008.  Prior to joining Esquire Bank, Mr. Bader
was Vice President at Goldman Sachs and served as a Vice President and Investment Officer at North Fork Bank.  Mr. Bader has
17 years of experience in the financial services industry.
·
Ari P. Kornhaber, Executive Vice President, Director of Sales
.
Mr. Kornhaber has served as Director of Sales at Esquire Bank since 2013. From 2004 to 2013, Mr. Kornhaber served as National Marketing
Director at Plaintiff Funding Holding, Inc. (dba LawCash). Mr. Kornhaber has spoken on the subject of financing for lawyers, law
firms and their clients, and the ethics surrounding the same, at numerous seminars and conferences across the United States for
over 10 years.  After receiving his law degree from Touro Law School in New York, Mr. Kornhaber was a practicing plaintiff's
lawyer in New York City with the law firm of Pariser and Vogelman, PC and was a trial attorney for the law firm of Napoli, Kaiser
and Bern, LLC, where he specialized in personal injury, medical malpractice and mass tort litigation.
·
Fred Horn, Senior Vice President, Director of Merchant Services
.
Mr. Horn joined Esquire Bank in 2012 to start up a merchant services program in order to generate processing fee income and
increase demand deposits.  Prior to joining Esquire Bank, Mr. Horn was Senior Vice President at Merrick Bank for 11 years
where he started and directed a merchant service program which became the sixteenth largest such program in the country. Mr. Horn
served for 25 years at Summit Bank, Princeton, New Jersey (now Bank of America), where he held a number of senior officer positions
including directing merchant services, an American Express,
MasterCard and Visa credit card portfolio and a top 10 US Visa debit card program.
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Our Growth Strategy
We believe that our model of community banking
with a focus on niche commercial products and merchant services provides us with differentiated advantages when compared to our
competitors, including a strong deposit franchise, a more complete set of product offerings and the ability to earn attractive
risk-adjusted net interest margins. The pool of potential law firm customers is substantial, yet the specialized lending markets
that serve them remain highly fragmented. Many of our commercial loans are de novo products which we believe are poised to capture
additional market share as they mature. We will leverage our commercial law firm relationships to continue enhancing and grow
our claimant/consumer lending base, meeting the needs of the law firms' customers. We expect to continue capturing market
share in the legal community because we provide both commercial and consumer clients with unique banking products and services.
Additionally, we plan to continue growing our merchant services platform for small businesses nationally, which we expect will
increase our fee income while offering lending and depository services to these businesses. Finally, we believe the lack of a
physical branch infrastructure and our strong balance sheet allows us to make investments in technology, personnel, marketing
and systems not available to non-bank commercial lenders.
We market our loans along with other products
and services through a variety of channels. Fundamentally, we focus on a high-touch direct sales model, building long-term relationships
with our customers. Our sales officers actively solicit new and existing customers in the communities we serve. For our commercial
products, our sales personnel travel across the country to meet with our customers throughout the year. Importantly, while we seek
to ensure that the pricing on our loans products is competitive, we also attempt to distinguish ourselves on criteria other than
price, including service, industry knowledge and what we believe is a more complete value proposition than our competitors. We
believe that our suite of complementary commercial and consumer legal industry product options coupled with our on-line cash management
platform allows us to offer full-service banking relationships to customers and industries that have historically been served by
smaller non-bank commercial finance companies. It is our strategy to deepen our customer relationships and increase retention by
cross-marketing all of these products to our customers in an effort to be a "one-stop" financial services provider,
particularly in our legal industry niche.
Credit Risk Management
We control credit risk both through disciplined
underwriting of each transaction, as well as active credit management processes and procedures to manage risk and minimize loss
throughout the life of a transaction. We seek to maintain a broadly diversified loan portfolio in terms of type of customer, type
of loan product, geographic area and industries in which our business customers are engaged. We have developed tailored underwriting
criteria and credit management processes for each of the various loan product types we offer our customers.
Underwriting.
In evaluating each
potential loan relationship, we adhere to a disciplined underwriting evaluation process including but not limited to the following:
·
understanding the customer's financial condition and ability
to repay the loan;
·
verifying that the primary and secondary sources of repayment are
adequate in relation to the amount and structure of the loan;
·
observing appropriate loan to value guidelines for collateral secured
loans;
·
maintaining our targeted levels of diversification for the loan portfolio,
both as to type of borrower and geographic location of collateral; and
·
ensuring that each loan is properly documented with perfected liens
on collateral.
Commercial Loans.
These loans
are typically made on the basis of the borrower's ability to make repayment from the cash flow of the borrower's business
and the collateral securing these loans may fluctuate in value.
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Our commercial loans are originated based on the identified cash
flow of the borrower and on the underlying collateral provided by the borrower. Most often, this collateral consists of the case
inventory of the law firm (borrowing base) and, to a lesser extent, accounts receivable or equipment.
·
Commercial Attorney-Related Loans (working capital lines of credit, case cost lines of credit, and term loans).
We perform the underwriting criteria typical for commercial business loans (three years of tax returns, three years of
financial data, cash flows, partner guarantees, partner personal financials and credit history, background checks, etc.). We also
review the firm's case inventory to ascertain the value of their future receivables. Typically, at least three years of successful
experience in plaintiff practice are required. Working capital lines of credit and case cost lines of credit are floating rate,
prime-based loans. The proceeds of a Case Cost loan can only be used against case expenses. These loans are subject to a general
security agreement evidenced by UCC-1 filing on all assets of the borrower, including but not limited to case inventory, accounts
receivable, fixtures and deposits where applicable. A key component of the underwriting process is an evaluation of the pending
cases of an applicant law firm to determine the probability and amount of future settlements. These loans are based on a borrowing
base that was developed by us whereby a law firm's case inventory is segmented into various stages and evaluated.
Consumer Loans.
Consumer loans
primarily consist of our Consumer Attorney-Related Loans, which include post-settlement consumer loans and structured settlement
loans. Other consumer loans originated to individuals for debt consolidation, home repairs, home improvement or major consumer
purchases, are generally dependent on the credit quality of the individual borrower and may be secured or unsecured. To ensure
the value of the settlement amount and likelihood and timeframe of payout, we require an executed settlement agreement or an affidavit
of attorney attesting to the existence of an accepted offer. Post-settlement consumer loans are generally for one year terms with
extensions granted based on acceptable supporting documentation regarding case status and viability, at Esquire Bank's discretion.
Structured settlement loans are generally for terms of three, five or seven years. As the settlements are court ordered, the risks
of settlements being renegotiated after we have made the loans are minimal.
·
Post-Settlement Consumer Loans.
Post-settlement consumer loans are fully-secured by the proceeds from
the settlement and are generated from our internal sales force or from third party brokers. An executed settlement agreement is
a prerequisite for such loans, and the loan-to-value ("LTV") ratio is generally limited to 50% of the net settlement
amount due to the borrower.
·
Structured Settlement Loans.
Structured settlement loans are structured such that the annuity provider (a highly
rated insurance company) is directed by the court, at the request of the borrower, to deposit the borrower's payments into
an account designated by us. Loan payments are then automatically deducted from the annuity payment.
1-4 Family Residential Loans.
Residential mortgage loans are purchased or originated for both primary and secondary residences, generally with fixed rates and
30-year or 15-year terms. Adjustable-rate mortgages ("ARMs") are purchased or originated as 1 year ARMs, 5/1 ARMs,
or 7/1 ARMs. We perform an extensive credit history review for each borrower. Second homes or investment properties are subject
to additional requirements. Debt-to-income ("DTI") and debt service coverage, if applicable, ratios generally conform
to industry standards for conforming loans. Flood insurance, title insurance and fire/hazard insurance are mandatory for all applications,
as appropriate.
Commercial Real Estate and Multifamily
Loans.
Loans secured by commercial and multifamily real estate generally have larger balances and involve a greater degree
of risk than 1-4 family residential mortgage loans. Of primary concern in commercial and multifamily real estate lending is the
borrower's creditworthiness and the feasibility and cash flow potential of the project. Payments on loans secured by income
properties often depend on successful operation and management of the properties. As a result, repayment of such loans may be subject
to a greater extent than residential real estate loans, to adverse conditions in the real estate market or the economy.
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In approving a commercial or multifamily
real estate loan, we consider and review a global cash flow analysis of the borrower and consider the net operating income of
the property, the borrower's expertise, credit history and profitability and the value of the underlying property.
Maximum LTV ratios are 80% of appraised value and we generally require that the properties securing these real estate loans
have minimum debt service ratios (the ratio of earnings before debt service to debt service) of 115%. Loan terms are fifteen
years or less with the option to extend another five years and amortization is based on a 25-30 year schedule or less. An
environmental phase one report is obtained when the possibility exists that hazardous materials may have existed on the site,
or the site may have been impacted by adjoining properties that handled hazardous materials. To monitor cash flows on income
properties, we require borrowers and loan guarantors, if any, to provide annual financial statements on commercial and
multifamily real estate loans.
Construction Loans.
Construction
lending involves additional risks when compared with permanent residential lending because funds are advanced upon the security
of the project, which is of uncertain value prior to its completion. This type of lending also typically involves higher loan principal
amounts and is often concentrated with a small number of builders. In addition, generally during the term of a construction loan,
interest may be funded by the borrower or disbursed from an interest reserve set aside from the construction loan budget. These
loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate
project and the ability of the borrower to sell or lease the property or obtain permanent take-out financing, rather than the ability
of the borrower or guarantor to repay principal and interest. Our construction loans are based upon estimates of costs and values
associated with the completed project. Underwriting is focused on the borrowers' financial strength, credit history and demonstrated
ability to produce a quality product and effectively market and manage their operations.
Loan Approval Authority
.
Our lending
activities follow written, non-discriminatory, underwriting standards and loan origination procedures established by our Board
of Directors and management. We have established several levels of lending authority that have been delegated by the Board of Directors
to the Directors Loan Committee, the Chief Lending Officer and other personnel in accordance with the Lending Authority in the
Loan Policy. Authority limits are based on the total exposure of the borrower and are conditioned on the loan conforming to the
policies contained in the Loan Policy. Any Loan Policy exceptions are fully disclosed to the approving authority.
Loans to One Borrower.
In accordance
with loans-to-one-borrower regulations, the Bank is generally limited to lending no more than 15% of its unimpaired capital and
unimpaired surplus to any one borrower or borrowing entity. This limit may be increased by an additional 10% for loans secured
by readily marketable collateral having a market value, as determined by reliable and continuously available price quotations,
at least equal to the amount of funds outstanding. To qualify for this additional 10% the bank must perfect a security interest
in the collateral and the collateral must have a market value at all times of at least 100% of the loan amount that exceeds the
15% general limit. At March 31, 2017, our regulatory limit on loans-to-one borrower was $7.8 million.
Management understands the importance of concentration
risk and continuously monitors to ensure that portfolio risk is balanced between such factors as loan type, industry, geography,
collateral, structure, maturity and risk rating, among other things. Our Loan Policy establishes detailed concentration limits
and sub limits by loan type and geography.
Ongoing Credit Risk Management.
In
addition to the tailored underwriting process described above, we perform ongoing risk monitoring and review processes for all
credit exposures. Although we grade and classify our loans internally, we have an independent third party professional firm perform
regular loan reviews to confirm loan classifications. We strive to identify potential problem loans early in an effort to aggressively
seek resolution of these situations before the loans create a loss, record any necessary charge-offs promptly and maintain adequate
allowance levels for probable loan losses incurred in the loan portfolio.
In general, whenever a particular loan or overall
borrower relationship is downgraded to pass-watch or substandard based on one or more standard loan grading factors, our credit
officers engage in active evaluation of the asset to determine the appropriate resolution strategy. Management regularly reviews
the status of the watch list and classified assets portfolio as well as the larger credits in the portfolio.
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In addition to our general credit risk management
processes, we employ additional risk management processes and procedures for our commercial loans to law firms. We require borrowing
base updates at least annually and also engage in active review and monitoring of the borrowing base collateral itself, including
field audits.
Investment Products.
We also offer
non-deposit investment products and related services through a third-party broker dealer, LPL Financial. Investment products and
services offered include investment analysis, mutual funds, annuities and life insurance.
Investments
We manage our investments primarily for liquidity
purposes, with a secondary focus on returns. Substantially all of our investments are classified as available-for-sale and can
be used to collateralize Federal Home Loan Bank of New York (FHLB) borrowings, FRB borrowings, public funds deposits or other borrowings.
At March 31, 2017, our investment portfolio had a fair value of $103.7 million, and consisted primarily of U.S. Government Agency
collateralized mortgage obligations and mortgage-backed securities.
Our investment objectives are primarily to provide
and maintain liquidity, establish an acceptable level of interest rate risk, to provide a use of funds when demand for loans is
weak and to generate a favorable return. Our board of directors has the overall responsibility for the investment portfolio, including
approval of our investment policy. The Asset Liability Committee (ALCO) and management are responsible for implementation of the
investment policy and monitoring our investment performance. The Board of Directors reviews the status of our investment portfolio
monthly.
We have legal authority to invest in various
types of investment securities and liquid assets, including U.S. Treasury obligations, securities of various government-sponsored
enterprises, mortgage-backed securities and municipal governments, deposits at the FHLB, certificates of deposit of federally insured
institutions, investment grade corporate bonds and investment grade marketable equity securities, including money market mutual
funds. We also are required to maintain an investment in FHLB stock, which investment is based primarily on the level of our FHLB
borrowings. Additionally, we are required to maintain an investment in Federal Reserve Bank of New York stock equal to six percent
of our capital and surplus. While we have the authority under applicable law to invest in derivative securities, we had no investments
in derivative securities at March 31, 2017.
Borrowings
We maintain diverse funding sources including
borrowing lines at the FHLB, two commercial banks and the Federal Reserve Bank discount window. Although we do not utilize borrowings
as a significant funding source,
we have from time to time utilized advances from the FHLB to supplement our supply
of investable funds. The FHLB functions as a central reserve bank providing credit for its member financial institutions. As a
member, we are required to own capital stock in the FHLB and are authorized to apply for advances on the security of such stock
and certain of our whole first mortgage loans and other assets (principally securities which are obligations of, or guaranteed
by, the United States), provided certain standards related to creditworthiness have been met. Advances are made under several different
programs, each having its own interest rate and range of maturities. Depending on the program, limitations on the amount of advances
are based either on a fixed percentage of an institution's net worth or on the Federal Home Loan Bank's assessment
of the institution's creditworthiness. As of March 31, 2017, we had $78.8 million of available borrowing capacity with the
FHLB. On that date, we had no advances outstanding from the FHLB. The other borrowing lines are maintained primarily for contingency
funding sources.
Competitors
The bank and non-bank financial services industries
in our markets and surrounding areas is highly competitive. We compete with a wide range of regional and national banks located
in our market areas as well as non-bank commercial finance companies on a nationwide basis. We experience competition in both lending
and attracting funds as well as merchant processing services from commercial banks, savings associations, credit unions, consumer
finance companies, pension trusts, mutual funds, insurance companies, mortgage bankers and brokers, brokerage and investment banking
firms, non-bank lenders, government agencies and certain other non-financial institutions. Many of these competitors have more
assets, capital and lending limits, and resources than we do and may
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be able to conduct more intensive and broader-based promotional
efforts to reach both commercial and individual customers. Competition for deposit products can depend heavily on pricing because
of the ease with which customers can transfer deposits from one institution to another.
We define the market area for legal community
products as law firms practicing within the United States, United States territories and United States commonwealths, and we serve
the litigation industry on a nationwide basis. For traditional community banking products and services, our primary market areas
are Nassau and New York (Manhattan) Counties in New York and secondarily throughout the state of New York.
Competition for Attorney-Related Loans is derived
primarily from eight to ten nationally-oriented financial companies that specialize in this market. Some of these companies are
focused exclusively on loans to law firms, while others offer loans to plaintiffs as well. While some overlap exists between the
litigation market loan products offered by Esquire Bank and these companies (primarily lines of credit, case-cost and post-settlement
commercial loans), there are a number of critical differences that management believes give Esquire Bank a competitive advantage:
·
Esquire Bank can offer more competitive rates on loans compared to
specialty finance companies because its cost of funds is much lower than the funding costs for these non-bank competitors. A number
of these companies purchase the settlements from law firms at steep discounts, which has drawn negative attention from some state
regulators. Esquire Bank does not purchase settlements, it uses them to collateralize loans;
·
the non-bank companies are not able to offer deposit products or business
services such as remote deposit capture or letters of credit, or debit cards; and
·
non-banks cannot offer products uniformly across the country because
they are not national banks.
We have established our niche in the litigation
community, which, according to the Towers Watson 2011 Update on U.S. Tort Cost Trends, was an approximately $264.6 billion market
in the United States in 2010, through the strategic development of a business model that understands our market's unique needs
and provides access to our target customers. We have designed unique, value added products and services for our current and potential
clients and created a distribution network with direct access to the market through the experience and networks of our Board of
Directors, attorney stockholders, customers and management. A number of our directors, investors and customers are active members
of leading litigation law firms in the nation, national and state bar associations as well as other industry leading companies.
In addition, we have established relationships with key industry organizations such as the American Association for Justice, Mass
Tort Made Perfect, New York State Trial Lawyers Association, Consumer Attorneys of California, Florida Justice Association and
others, which we believe gives us access to thousands of trial attorneys across the United States.
Our traditional community banking market area
has a diversified economy typical of most urban population centers, with the majority of employment provided by services, wholesale/retail
trade finance/insurance/real estate ("FIRE") and construction. Services account for the largest employment sector across
the two primary market area counties, while wholesale/retail trade accounts for the second largest employment sector in Nassau
and New York Counties. New York City is one of the premier financial centers in the world, and thus FIRE is the third largest employment
sector in New York County.
Personnel
As of March 31, 2017, we had 50 full-time employees,
none of whom are represented by a collective bargaining unit. We believe we have a good working relationship with our employees.
Subsidiaries
Esquire Bank, National Association is the sole
subsidiary of Esquire Financial Holdings, Inc. and there are no subsidiaries of Esquire Bank, National Association.
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Legal Proceedings
We are subject to certain pending and threatened
legal actions that arise out of the normal course of business. Management, following consultation with legal counsel, does not
expect the ultimate disposition of these matters to, individually or in the aggregate, have a material adverse effect on our business.
However, given the nature, scope and complexity of the extensive legal and regulatory landscape applicable to our business (including
laws and regulations governing consumer protection, fair lending, fair labor, privacy, employment, information security and anti-money
laundering and anti-terrorism laws), we, like all banking organizations, are subject to heightened legal and regulatory compliance
and litigation risk.
Properties
At March 31, 2017, we conducted business through
our corporate headquarters in Jericho, New York (Nassau County), and one administrative office in Palm Beach Gardens, Florida.
In November 2016, we completed construction of our new corporate headquarters facility in Jericho, New York. All the current locations
and our new headquarters are leased properties. Our lease for our new corporate headquarters is for a ten year term. At March 31,
2017, the total net book value of our leasehold improvements, furniture, fixtures and equipment was approximately $2.7 million.
We have no current plans to expand our branch
network as we believe we are positioned to further develop our primary markets through the use of technology with limited traditional
branch offices.
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SUPERVISION AND REGULATION
General
Esquire Bank is a national bank organized under
the laws of the United States of America and its deposits are insured to applicable limits by the DIF. The lending, investment,
deposit-taking, and other business authority of Esquire Bank is governed primarily by federal law and regulations and Esquire Bank
is prohibited from engaging in any operations not authorized by such laws and regulations. Esquire Bank is subject to extensive
regulation, supervision and examination by, and the enforcement authority of, the OCC, and to a lesser extent by the FDIC, as its
deposit insurer, as well as by the FRB. Esquire Bank is also subject to federal financial consumer protection and fair lending
laws and regulations of the Consumer Financial Protection Bureau, though the OCC is responsible for examining and supervising the
bank's compliance with these laws. The regulatory structure establishes a comprehensive framework of activities in which
a national bank may engage and is primarily intended for the protection of depositors, customers and the DIF. The regulatory structure
gives the regulatory agencies extensive discretion in connection with their supervisory and enforcement activities and examination
policies, including policies with respect to the classification of assets and the establishment of adequate loan loss reserves
for regulatory purposes.
Esquire Financial Holdings, Inc. is a bank holding
company, due to its control of Esquire Bank, and is therefore subject to the requirements of the Bank Holding Company Act of 1956,
as amended ("BHCA"), and regulation and supervision by the FRB. The Company files reports with and is subject to periodic
examination by the FRB.
Any change in the applicable laws and regulations,
whether by the OCC, the FDIC, the FRB or through legislation, could have a material adverse impact on Esquire Bank and the Company
and their operations and the Company's stockholders.
The Dodd-Frank Act made extensive changes in
the regulation of insured depository institutions. Among other things, the Dodd-Frank Act (i) created a new Consumer Financial
Protection Bureau as an independent bureau to assume responsibility for the implementation of the federal financial consumer protection
and fair lending laws and regulations, a function previously assigned to prudential regulators; (although institutions of less
than $10 billion in assets, such as Esquire Bank, continue to be examined for compliance with consumer protection and fair lending
laws and regulations by, and be subject to the primary enforcement authority of their primary federal bank regulator rather than
the Consumer Financial Protection Bureau); (ii) directed changes in the way that institutions are assessed for deposit insurance;
(iii) mandated the revision of regulatory capital requirements; (iv) codified the FRB's long-standing policy that a bank
holding company must serve as a source of financial and managerial strength for its subsidiary banks; (v) required regulations
requiring originators of certain securitized loans to retain a percentage of the risk for the transferred loans; (vi) stipulated
regulatory rate-setting for certain debit card interchange fees; (vii) repealed restrictions on the payment of interest on commercial
demand deposits; (viii) enacted the so-called Volcker Rule, which general prohibits banking organizations from engaging in proprietary
trading and from investing in, sponsoring or having certain relationships with hedge funds and (ix) contained a number of reforms
related to mortgage originations.
Many of the provisions of the Dodd-Frank Act
had delayed effective dates and/or required the issuance of implementing regulations. The regulatory process is ongoing and the
impact on operations cannot yet be fully assessed. However, the Dodd-Frank Act has, and will likely continue to cause increased
regulatory burden, compliance costs and interest expense for the Company and Esquire Bank.
What follows is a summary of some of the laws
and regulations applicable to Esquire Bank and Esquire Financial Holdings. The summary is not intended to be exhaustive and is
qualified in its entirety by reference to the actual laws and regulations.
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Esquire Bank, National Association
Loans and Investments
National banks have authority to originate and
purchase any type of loan, including commercial, commercial real estate, residential mortgages or consumer loans. Aggregate loans
by a national bank to any single borrower or group of related borrowers are generally limited to 15% of Esquire Bank's capital
and surplus, plus an additional 10% if secured by specified readily marketable collateral.
Federal law and OCC regulations limit Esquire
Bank's investment authority. Generally, a national bank is prohibited from investing in corporate equity securities for its
own account other than companies through which the bank conducts its business. Under OCC regulations, a national bank may invest
in investment securities up to specified limits depending upon the type of security. "Investment securities" are generally
defined as marketable obligations that are investment grade and not predominantly speculative in nature. The OCC classifies investment
securities into five different types and, depending on its type, a national bank may have the authority to deal in and underwrite
the security. The OCC has also permitted national banks to purchase certain noninvestment grade securities that can be reclassified
and underwritten as loans.
Lending Standards
The federal banking agencies adopted uniform
regulations prescribing standards for extensions of credit that are secured by liens or interests in real estate or made for the
purpose of financing permanent improvements to real estate. Under these regulations, all insured depository institutions, such
as Esquire Bank, must adopt and maintain written policies establishing appropriate limits and standards for extensions of credit
that are secured by liens or interests in real estate or are made for the purpose of financing permanent improvements to real estate.
These policies must establish loan portfolio diversification standards, prudent underwriting standards (including loan-to-value
limits) that are clear and measurable, loan administration procedures, and documentation, approval and reporting requirements.
The real estate lending policies must reflect consideration of the federal bank regulators' Interagency Guidelines for Real
Estate Lending Policies that have been adopted.
Federal Deposit Insurance
Deposit accounts at Esquire Bank are insured
by the FDIC's DIF. Effective July 22, 2010, the Dodd-Frank Act permanently raised the deposit insurance available on all
deposit accounts to $250,000 with a retroactive effective date of January 1, 2008.
Under the FDIC's risk-based assessment
system, insured institutions were assigned a risk category based on supervisory evaluations, regulatory capital levels and certain
other factors. An institution's rate depended upon the category to which it is assigned, and certain adjustments specified
by FDIC regulations. Institutions deemed less risky pay FDIC assessments. The Dodd-Frank Act required the FDIC to revise its procedures
to base its assessments upon each insured institution's total assets less tangible equity instead of deposits. The FDIC finalized
a rule, effective April 1, 2011, that set the assessment range at 2.5 to 45 basis points of total assets less tangible equity.
Effective July 1, 2016, the FDIC adopted changes that eliminated the risk categories and base assessments for most banks on financial
measures and supervisory ratings derived from statistical modeling estimating the probability of failure over three years. In conjunction
with the DIF reserve ratio achieving 1.5%, the assessment range (inclusive of possible adjustments) was also reduced for most banks
to 1.5 basis points to 30 basis points of total assets less tangible equity.
The FDIC may adjust its assessment scale uniformly,
except that no adjustment can deviate more than two basis points from the base scale without notice and comment. No insured institution
may pay a dividend if in default of the federal deposit insurance assessment.
The FDIC may terminate deposit insurance upon
a finding that an institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations
or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC. We do not know of any practice, condition
or violation that might lead to termination of Esquire Bank's deposit insurance.
In addition to the FDIC assessments, the Financing
Corporation (FICO) is authorized to impose and collect, through the FDIC as collection agent, assessments for anticipated payments,
issuance costs and custodial fees on bonds issued by the FICO in the 1980s to recapitalize the now defunct Federal Savings and
Loan Insurance
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Corporation. The bonds issued by the FICO are due to mature in 2017
through 2019. For the quarter ended December 31, 2016, the annualized FICO assessment was equal to 0.56 basis points of average
consolidated total assets less average tangible equity.
Capitalization
Federal regulations require FDIC insured depository
institutions, including national banks, to meet several minimum capital standards: a common equity Tier 1 capital to risk-based
assets ratio, a Tier 1 capital to risk-based assets ratio, a total capital to risk-based assets and a Tier 1 capital to total assets
leverage ratio. The existing capital requirements were effective January 1, 2015 and are the result of a final rule implementing
regulatory amendments based on recommendations of the Basel Committee on Banking Supervision and certain requirements of the Dodd-Frank
Act.
The capital standards require the maintenance
of common equity Tier 1 capital, Tier 1 capital and total capital to risk-weighted assets of at least 4.5%, 6% and 8%,
respectively, and a leverage ratio of at least 4% Tier 1 capital. Common equity Tier 1 capital is generally defined as common
stockholders' equity and retained earnings. Tier 1 capital is generally defined as common equity Tier 1 and Additional Tier
1 capital. Additional Tier 1 capital generally includes certain noncumulative perpetual preferred stock and related surplus and
minority interests in equity accounts of consolidated subsidiaries. Total capital includes Tier 1 capital (common equity Tier 1
capital plus Additional Tier 1 capital) and Tier 2 capital. Tier 2 capital is comprised of capital instruments and related surplus
meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible
securities, intermediate preferred stock and subordinated debt. Also included in Tier 2 capital is the allowance for loan and lease
losses limited to a maximum of 1.25% of risk-weighted assets and, for institutions that have exercised an opt-out election regarding
the treatment of Accumulated Other Comprehensive Income ("AOCI"), up to 45% of net unrealized gains on available-for-sale
equity securities with readily determinable fair market values. Institutions that have not exercised the AOCI opt-out have AOCI
incorporated into common equity Tier 1 capital (including unrealized gains and losses on available-for-sale-securities). We exercised
the opt-out election regarding the treatment of AOCI. Calculation of all types of regulatory capital is subject to deductions and
adjustments specified in the regulations.
In determining the amount of risk-weighted assets
for purposes of calculating risk-based capital ratios, a bank's assets, including certain off-balance sheet assets (e.g.,
recourse obligations, direct credit substitutes, residual interests), are multiplied by a risk weight factor assigned by the regulations
based on perceived risks inherent in the type of asset. Higher levels of capital are required for asset categories believed to
present greater risk. For example, a risk weight of 0% is assigned to cash and U.S. government securities, a risk weight of 50%
is generally assigned to prudently underwritten first lien 1-4 family residential mortgages, a risk weight of 100% is assigned
to commercial and consumer loans, a risk weight of 150% is assigned to certain past due loans and a risk weight of between 0% to
600% is assigned to permissible equity interests, depending on certain specified factors.
In addition to establishing the minimum regulatory
capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management if the
institution does not hold a "capital conservation buffer" consisting of 2.5% of common equity Tier 1 capital to risk-weighted
assets above the amount necessary to meet its minimum risk-based capital requirements. The capital conservation buffer requirement
is being phased in beginning January 1, 2016 at 0.625% of risk-weighted assets and increasing each year until fully implemented
at 2.5% on January 1, 2019.
On November 2, 2012, the OCC notified Esquire
Bank that it had established minimum capital ratios for Esquire Bank requiring Esquire Bank to maintain, commencing December
1, 2012, a Tier 1 leverage capital ratio of 9.0%, a Tier 1 risk-based capital ratio of 11.0% and a total risk-based capital to
risk-weighted assets ratio of 13.0%.
Safety and Soundness Standards
Each federal banking agency, including the OCC, has adopted guidelines
establishing general standards relating to internal controls, information and internal audit systems, loan documentation, credit
underwriting, interest rate exposure, asset growth, asset quality, earnings, compensation, fees and benefits and information security
standards. In general, the guidelines require appropriate systems and practices to identify and manage the risks and exposures
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specified in the guidelines. The guidelines prohibit excessive compensation
as an unsafe and unsound practice and describe compensation as excessive when the amounts paid are unreasonable or disproportionate
to the services performed by an executive officer, employee, director, or principal stockholder. The FDIC also has issued guidance
on risks banks may face from third party relationships (e.g. relationships under which the third party provides services to the
bank). The guidance generally requires the bank to perform adequate due diligence on the third party, appropriately document the
relationship, and perform adequate oversight and auditing, in order to the limit the risks to the bank.
Prompt Corrective Regulatory Action
Federal law requires that federal bank regulatory
authorities take "prompt corrective action" with respect to institutions that do not meet minimum capital requirements.
For these purposes, the statute establishes five capital tiers: well capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized and critically undercapitalized.
National banks that have insufficient capital
are subject to certain mandatory and discretionary supervisory measures. For example, a bank that is "undercapitalized"
(i.e. fails to comply with any regulatory capital requirement) is subject to growth limitations and is required to submit a capital
restoration plan; a holding company that controls such a bank is required to guarantee that the bank complies with the restoration
plan. A "significantly undercapitalized" bank is subject to additional restrictions. National banks deemed by the OCC
to be "critically undercapitalized" are subject to the appointment of a receiver or conservator.
The final rule that increased regulatory capital
standards also adjusted the prompt corrective action tiers as of January 1, 2015 to conform to the new capital standards. The various
categories now incorporate the newly adopted common equity Tier 1 capital requirement, an increase in the Tier 1 to risk-based
assets requirement and other changes. Under the revised prompt corrective action requirements, insured depository institutions
are required to meet the following in order to qualify as "well capitalized:" (1) a common equity Tier 1 risk-based
capital ratio of 6.5% (new standard); (2) a Tier 1 risk-based capital ratio of 8% (increased from 6%); (3) a total risk-based capital
ratio of 10% (unchanged) and (4) a Tier 1 leverage ratio of 5% (unchanged).
Dividends
Under federal law and applicable regulations,
a national bank may generally declare a cash dividend, without approval from the OCC, in an amount equal to its year-to-date net
income plus the prior two years' net income that is still available for cash dividend. Cash dividends exceeding those amounts
require application to and approval by the OCC. To pay a cash dividend, a national bank must also maintain an adequate capital
conservation buffer under the capital rules discussed above.
Transactions with Affiliates and Insiders
Sections 23A and 23B of the Federal Reserve
Act govern transactions between a national bank and its affiliates, which includes the Company. The FRB has adopted Regulation
W, which implements and interprets Sections 23A and 23B, in part by codifying prior FRB interpretations.
An affiliate of a bank is any company or entity
that controls, is controlled by or is under common control with the bank. A subsidiary of a bank that is not also a depository
institution or a "financial subsidiary" under federal law is not treated as an affiliate of the bank for the purposes
of Sections 23A and 23B; however, the OCC has the discretion to treat subsidiaries of a bank as affiliates on a case-by-case basis.
Section 23A limits the extent to which a bank or its subsidiaries may engage in "covered transactions" with any one
affiliate to 10% of the bank's capital stock and surplus. There is an aggregate limit of 20% of the bank's capital
stock and surplus for such transactions with all affiliates. The term "covered transaction" includes, among other things,
the making of a loan to an affiliate, a purchase of assets from an affiliate, the issuance of a guarantee on behalf of an affiliate
and the acceptance of securities of an affiliate as collateral for a loan. All such transactions are required to be on terms and
conditions that are consistent with safe and sound banking practices and no transaction may involve the acquisition of any "low
quality asset" from an affiliate. Certain covered transactions, such as loans to or guarantees on behalf of an affiliate,
must be secured by collateral in amounts ranging from 100 to 130 percent of the loan amount, depending upon the type of
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collateral. In addition, Section 23B requires that any covered transaction
(and specified other transactions) between a bank and an affiliate must be on terms and conditions that are substantially the same,
or at least as favorable, to the bank, as those that would be provided to a non-affiliate.
A bank's loans to its executive officers,
directors, any owner of more than 10% of its stock (each, an "insider") and certain entities affiliated with any such
person (an insider's "related interest") are subject to the conditions and limitations imposed by Section 22(h)
of the Federal Reserve Act and the FRB's Regulation O. The aggregate amount of a bank's loans to any insider and the
insider's related interests may not exceed the loans-to-one-borrower limit applicable to national banks. Aggregate loans
by a bank to its insiders and insiders' related interests may not exceed the bank's unimpaired capital and unimpaired
surplus. With certain exceptions, such as education loans and certain residential mortgages a bank's loans to its executive
officers, may not exceed the greater of $25,000 or 2.5% of the bank's unimpaired capital and unimpaired surplus, but in no
event more than $100,000. Regulation O also requires that any loan to an insider or a related interest of an insider be approved
in advance by a majority of the board of directors of the bank, with any interested director not participating in the voting, if
the loan, when aggregated with any existing loans to that insider or the insider's related interests, would exceed the lesser
or $500,000 or 5% of the bank's unimpaired capital and surplus. Generally, such loans must be made on substantially the same
terms as, and follow credit underwriting procedures that are no less stringent than, those that are prevailing at the time for
comparable transactions with other persons and must not present more than a normal risk of collectability. An exception is made
for extensions of credit made pursuant to a benefit or compensation plan of a bank that is widely available to employees of the
bank and that does not give any preference to insiders of the bank over other employees of the bank.
Enforcement
The OCC has extensive enforcement authority
over national banks to correct unsafe or unsound practices and violations of law or regulation. Such authority includes the issuance
of cease and desist orders, assessment of civil money penalties and removal of officers and directors. The OCC may also appoint
conservator or receiver for a national bank under specified circumstances, such as where (i) the bank's assets are less than
its obligations to creditors, (ii) the bank is likely to be unable to pay its obligations or meet depositors' demands in
the normal course of business or (iii) a substantial dissipation of bank assets or earnings has occurred due to a violation of
law of regulation or unsafe or unsound practices.
Federal Reserve System
Under FRB regulations, Esquire Bank is required
to maintain reserves at the Federal Reserve Bank against its transaction accounts, including checking and NOW accounts. The regulations
currently require that reserves of 3% be maintained against aggregate transaction accounts over $15.5 million and 10% against that
portion of total transaction accounts in excess of $115.1 million. The first $15.5 million of otherwise reservable balances are
exempted from the reserve requirements. The Bank is in compliance with these requirements. The requirements are adjusted annually
by the FRB. The FRB began paying interest on reserves in 2008, currently 0.50%.
Examinations and Assessments
Esquire Bank is required to file periodic reports
with and is subject to periodic examination by the OCC. Federal regulations generally require periodic on-site examinations for
all depository institutions. Esquire Bank is required to pay an annual assessment to the OCC to fund the agency's operations.
Community Reinvestment Act and Fair Lending Laws
Under the CRA, Esquire Bank has a continuing
and affirmative obligation consistent with its safe and sound operation to help meet the credit needs of its entire community,
including low and moderate income neighborhoods. The CRA does not establish specific lending requirements or programs for financial
institutions nor does it limit an institution's discretion to develop the types of products and services that it believes
are best suited to its particular community. The CRA requires the OCC to assess its record of meeting the credit needs of its community
and to take that record into account in its evaluation of certain applications by Esquire Bank. For example, the regulations specify
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that a bank's CRA performance will be considered in its expansion
(e.g., branching or merger) proposals and may be the basis for approving, denying or conditioning the approval of an application.
As of the date of its most recent OCC evaluation, Esquire Bank was rated "satisfactory" with respect to its CRA compliance.
USA PATRIOT Act and Money Laundering
Esquire Bank is subject
to the federal Bank Secrecy Act (the "BSA"), which incorporates several laws, including the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, or the USA PATRIOT Act and related
regulations. The USA PATRIOT Act gives the federal government powers to address money laundering and terrorist threats through
enhanced domestic security measures, expanded surveillance powers, increased information sharing, and broadened anti-money laundering
requirements. By way of amendments to the Bank Secrecy Act, Title III of the USA PATRIOT Act implemented measures intended
to encourage information sharing among bank regulatory agencies and law enforcement bodies. Further, certain provisions of Title III
impose affirmative obligations on a broad range of financial institutions, including banks, thrifts, brokers, dealers, credit unions,
money transfer agents and parties registered under the Commodity Exchange Act.
Among other things, Title III
of the USA PATRIOT Act and the related regulations require:
·
Establishment of anti-money laundering
compliance programs that includes policies, procedures, and internal controls; the appointment of an anti-money laundering compliance
officer; a training program; and independent testing;
·
Filing of certain reports to FinCEN and
law enforcement that are designated to assist in the detection and prevention of money laundering and terrorist financing activities;
·
Establishment of a program specifying
procedures for obtaining and maintaining certain records from customers seeking to open new accounts, including verifying the identity
of customers;
·
In certain circumstances, compliance with
enhanced due diligence policies, procedures and controls designed to detect and report money-laundering, terrorist financing and
other suspicious activity;
·
Monitoring account activity for suspicious transactions; and
·
A heightened level of review for certain high risk customers or accounts.
The USA PATRIOT Act also
includes prohibitions on correspondent accounts for foreign shell banks and requires compliance with record keeping obligations
with respect to correspondent accounts of foreign banks.
The bank regulatory agencies have increased
the regulatory scrutiny of the Bank Secrecy Act and anti-money laundering programs maintained by financial institutions. Significant
penalties and fines, as well as other supervisory orders may be imposed on a financial institution for non-compliance with these
requirements. In addition, the federal bank regulatory agencies must consider the effectiveness of financial institutions engaging
in a merger transaction in combating money laundering activities.
Esquire Bank has adopted
policies and procedures to comply with these requirements.
Privacy Laws
Esquire Bank is subject to a variety of
federal and state privacy laws, which govern the collection, safeguarding, sharing and use of customer information. For
example, the Gramm-Leach-Bliley Act requires all financial institutions offering financial products or services to retail
customers to provide such customers with the financial institution's privacy policy and provide such customers the
opportunity to "opt out" of the sharing of certain personal financial information with unaffiliated third
parties. It also requires banks to safeguard personal information of consumer customers. Some state laws also protect the privacy
of information of state residents and require adequate security for such data.
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Merchant Services
Esquire Bank is also subject to the rules of
Visa, MasterCard and other payment networks in which it participates. If Esquire Bank fails to comply with such rules, the networks
could impose fines or require us to stop providing merchant services for cards under such network's brand or routed through
such network.
Other Regulations
Esquire Bank's operations are also subject
to federal laws applicable to credit transactions, such as:
·
The Truth-In-Lending Act, governing disclosures of credit terms to
consumer borrowers;
·
The Real Estate Settlement Procedures Act, requiring that borrowers
for mortgage loans for 1-4 family residential real estate receive various disclosures, including good faith estimates of settlement
costs, lender servicing and escrow account practices, and prohibiting certain practices that increase the cost of settlement services;
·
The Home Mortgage Disclosure Act, requiring financial institutions
to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its
obligation to help meet the housing needs of the community it serves;
·
The Equal Credit Opportunity Act and other fair lending laws, prohibiting
discrimination on the basis of race, religion, sex and other prohibited factors in extending credit;
·
The Fair Credit Reporting Act, governing the use of credit reports
on consumers and the provision of information to credit reporting agencies;
·
Unfair or Deceptive Acts or Practices laws and regulations;
·
The Fair Debt Collection Act, governing the manner in which consumer
debts may be collected by collection agencies; and
·
The rules and regulations of the various federal agencies charged
with the responsibility of implementing such federal laws.
The operations of Esquire Bank are further subject
to the:
·
The Truth in Savings Act, which specifies disclosure requirements
with respect to deposit accounts;
·
The Right to Financial Privacy Act, which imposes a duty to maintain
confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial
records;
·
The Electronic Funds Transfer Act and Regulation E promulgated thereunder,
which govern automatic deposits to and withdrawals from deposit accounts and customers' rights and liabilities arising from
the use of automated teller machines and other electronic banking services; and
·
The Check Clearing for the 21
st
Century Act (also known
as "Check 21"), which gives "substitute checks," such as digital check images and copies made from that
image, the same legal standing as the original paper check.
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Holding Company Regulation
The Company, as a bank holding company controlling
Esquire Bank, is subject to regulation and supervision by the FRB under the BHCA. The Company is periodically examined by, required
to submit reports to the FRB and is required to comply with the FRB's rules and regulations. Among other things, the FRB
has authority to restrict activities by a bank holding company that are deemed to pose a serious risk to the subsidiary bank.
The FRB has historically imposed consolidated
capital adequacy guidelines for bank holding structured similar, but not identical, to those of the OCC for national banks. The
Dodd-Frank Act directed the FRB to issue consolidated capital requirements for depository institution holding companies that are
no less stringent, both quantitatively and in terms of components of capital, than those applicable to institutions themselves.
The previously discussed final rule regarding regulatory capital requirements implemented the Dodd-Frank Act as to bank holding
company capital standards. Consolidated regulatory capital requirements identical to those applicable to the subsidiary banks applied
to bank holding companies as of January 1, 2015. However, the FRB exempts from the consolidated capital requirements bank holding
companies with less than $1 billion in assets, unless otherwise directed in specific cases. Consequently, the Company is not currently
subject to the consolidated holding company capital requirements.
The policy of the FRB is that a bank holding
company must serve as a source of financial and managerial strength to its subsidiary banks by providing capital and other support
in times of distress. The Dodd-Frank Act codified the source of strength policy.
Under the prompt corrective action provisions
of federal law, a bank holding company parent of an undercapitalized subsidiary bank is required to guarantee, within specified
limits, the capital restoration plan that is required of an undercapitalized bank. If an undercapitalized bank fails to file an
acceptable capital restoration plan or fails to implement an accepted plan, the FRB may prohibit the bank holding company parent
of the undercapitalized bank from paying dividends or making any other capital distribution.
As a bank holding company, the Company is required
to obtain the prior approval of the FRB to acquire more than 5% of a class of voting securities of any additional bank or bank
holding company or to acquire all or substantially all, the assets of any additional bank or bank holding company. In evaluating
acquisition application, the FRB evaluates factors such as the financial condition, management resources and future prospects of
the parties, the convenience and needs of the communities involved and competitive factors. In addition, bank holding companies
may generally only engage in activities that are closely related to banking as determined by the FRB. Bank holding companies that
meet certain criteria may opt to become a financial holding company and thereby engage in a broader array of financial activities.
FRB policy is that a bank holding company should
pay cash dividends only to the extent that the company's net income for the past two years is sufficient to fund the dividends
and the prospective rate of earnings retention is consistent with the company's capital needs, asset quality and overall
financial condition. In addition, FRB guidance sets forth the supervisory expectation that bank holding companies will inform and
consult with Federal Reserve Bank staff in advance of issuing a cash dividend that exceeds earnings for the quarter and should
inform the Federal Reserve Bank and should eliminate, defer or significantly reduce dividends if (i) net income available to stockholders
for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends,
(ii) prospective rate of earnings retention is not consistent with the bank holding company's capital needs and overall current
and prospective financial condition, or (iii) the bank holding company will not meet, or is in danger of not meeting, its minimum
regulatory capital adequacy ratios.
A bank holding company is required to give the
FRB prior written notice of any repurchase or redemption of its outstanding equity securities if the gross consideration for repurchase
or redemption, when combined with the net consideration paid for all such repurchases or redemptions during the preceding 12 months,
will be equal to 10% or more of the company's consolidated net worth. The FRB may disapprove such a repurchase or redemption
if it determines that the proposal would constitute an unsafe and unsound practice or violate a law or regulation. Such notice
and approval is not required for a bank holding company that meets certain qualitative criteria. However, FRB guidance generally
provides for bank holding company consultation with Federal Reserve Bank staff prior to engaging in a repurchase or redemption of a bank holding company's
stock, regardless of whether a formal written notice is required.
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The above FRB requirements may restrict a bank
holding company's ability to pay dividends to stockholders or engage in repurchases or redemptions of its shares.
Acquisition of Control
of the Company.
Under the Change in Bank Control Act, no person may acquire control of a bank holding company such as the
Company unless the FRB has been prior written notice and has not issued a notice disapproving the proposed acquisition. In evaluating
such notices, the FRB takes into consideration such factors as the financial resources, competence, experience and integrity of
the acquirer, the future prospects the bank holding company involved and its subsidiary bank and the competitive effects of the
acquisition.  Control, as defined under federal law, means ownership, control of or holding irrevocable proxies representing
more than 25% of any class of voting stock, control in any manner of the election of a majority of the company's directors,
or a determination by the regulator that the acquiror has the power to direct, or directly or indirectly to exercise a controlling
influence over, the management or policies of the institution.  Acquisition of more than 10% of any class of a bank holding
company's voting stock constitutes a rebuttable presumption of control under the regulations under certain circumstances
including where, is the case with the Company, the issuer has registered securities under Section 12 of the Securities Exchange
Act of 1934.
Federal Securities Laws
Esquire Financial Holdings, Inc.'s common
stock will be registered with the Securities and Exchange Commission prior to the completion of the stock offering. Esquire Financial
Holdings, Inc. will be a reporting company subject to the information, proxy solicitation, insider trading restrictions and other
requirements under the Securities Exchange Act of 1934.
Emerging Growth Company Status
The Jumpstart Our Business Startups Act (the
"JOBS Act"), which was enacted in April 2012, has made numerous changes to the federal securities laws to facilitate
access to capital markets. Under the JOBS Act, a company with total annual gross revenues of less than $1.07 billion during its
most recently completed fiscal year qualifies as an "emerging growth company." Esquire Financial Holdings, Inc. qualifies
as an emerging growth company under the JOBS Act.
An "emerging growth company" may
choose not to hold stockholder votes to approve annual executive compensation (more frequently referred to as "say-on-pay"
votes) or executive compensation payable in connection with a merger (more frequently referred to as "say-on-golden parachute"
votes). An emerging growth company also is not subject to the requirement that its auditors attest to the effectiveness of the
company's internal control over financial reporting, and can provide scaled disclosure regarding executive compensation;
however, Esquire Financial Holdings, Inc. will also not be subject to the auditor attestation requirement or additional executive
compensation disclosure so long as it remains a "smaller reporting company" under Securities and Exchange Commission
regulations (generally less than $75 million of voting and non-voting equity held by non-affiliates). Finally, an emerging growth
company may elect to comply with new or amended accounting pronouncements in the same manner as a private company, but must make
such election when the company is first required to file a registration statement. Such an election is irrevocable during the period
a company is an emerging growth company. Esquire Financial Holdings, Inc. has elected to comply with new or amended accounting
pronouncements in the same manner as a public company.
A company loses emerging growth company status
on the earlier of: (i) the last day of the fiscal year of the company during which it had total annual gross revenues of $1.07
billion or more; (ii) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale
of common equity securities of the company pursuant to an effective registration statement under the Securities Act of 1933; (iii)
the date on which such company has, during the previous three-year period, issued more than $1.0 billion in non-convertible debt;
or (iv) the date on which such company is deemed to be a "large accelerated filer" under Securities and Exchange Commission
regulations (generally, at least $700 million of voting and non-voting equity held by non-affiliates).
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Sarbanes-Oxley Act of 2002
The Sarbanes-Oxley Act of 2002 is intended to
improve corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded
companies and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to the securities
laws. We have policies, procedures and systems designed to comply with these regulations, and we review and document such policies,
procedures and systems to ensure continued compliance with these regulations.
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MANAGEMENT
Our Directors and Executive Officers
The following table states our directors'
names, their ages as of March 31, 2017, the years that they began serving as directors and when their current term as directors
of Esquire Financial Holdings, Inc. expires.
Name
Position(s)
    With the Company
Age
    at
March 31,
2017
Director
Since
Expiration
of
        Term
Dennis Shields
Executive Chairman
50
2006
2019
Selig A. Zises
Director
75
2009
2019
Todd Deutsch
Director
44
2015
2019
John Morgan
Director
61
2015
2019
Russ M. Herman
Director
74
2007
2017
Robert J. Mitzman
Director
62
2007
2017
Kevin C. Waterhouse
Director
49
2006
2017
Marc Grossman
Director
49
2013
2017
Janet Hill
Director
69
2016
2018
Anthony Coelho
Director
74
2010
2018
Richard T. Powers
Director
69
2006
2018
Jack Thompson
Director
45
2016
2017
Andrew C. Sagliocca
President, Chief Executive Officer, Director
49
2007
2018
The following table sets forth information regarding
our executive officers and their ages as of the date of this prospectus. The executive officers of Esquire Financial Holdings,
Inc. are appointed annually.
Name
Position(s)
    With the Company
Age
    at
March 31, 2017
Dennis Shields
Executive Chairman
50
Andrew C. Sagliocca
President, Chief Executive Officer, Director
49
Eric S. Bader
Executive Vice President, Chief Financial Officer, Treasurer and Corporate Secretary
40
Ari P. Kornhaber
Executive Vice President, Director of Sales
45
The Business Background of Our Directors and Executive Officers
The following is a brief discussion of the business
and banking background and experience of our directors and executive officers
for at least
the past five years
.
With respect to directors, the biographies also contain information
regarding the person's experience, qualifications, attributes or skills that led to the conclusion that the person should
serve as a director. Unless otherwise indicated, directors and senior officers have held their positions for the past five years.
No director has any family relationship, as defined in Item 401 of Regulation S-K, with any other director or with
any of our executive officers.
Anthony Coelho, Director.
Mr.
Coelho has served as Chair of the Advisory Board for Bender Consulting Services since 2002 and was Chair and a Board Member for
the American Association of People with Disabilities and the Lead Independent Director of Service Corporation International. Mr.
Coelho was a prominent member of the U.S. House of Representatives from 1978 – 1989. While a member of the House of Representatives,
he authored the Americans with Disabilities Act, widely recognized as one of the most important pieces of civil rights legislation
in the last 40 years. Mr. Coelho's former and current business affiliations include service on a number of corporate boards and
as CEO of Wertheim Schroder Investment Services. Mr. Coelho has been a member of the Esquire Bank board of directors since
2010. Mr. Coelho provides the Board with valuable perspective on general business oversight, as well as potential strategic initiatives.
Todd Deutsch, Director
. Mr. Deutsch
is a private investor and entrepreneur. Since 2012, Mr. Deutsch has managed his family office. From 2009 to 2012, Mr. Deutsch was
the Portfolio Manager/Principal at Bascom Hill Partners, a wealth management services company. Prior to running his family office
and Bascom Hill Partners,
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Mr. Deutsch spent twenty years as a trader with Goldman Sachs
and various hedge funds. Mr. Deutsch has been a member of the Esquire Bank board of directors since 2015. Mr. Deutsch
provides the Board with extensive financial and business experience as well as valuable insight into managing and overseeing
a business.
Marc D. Grossman, Director
.
As
a Founding and senior partner of The Sanders Law Firm since 2003, Mr. Grossman is an innovator and leader in the mass settlement
of medical claims and mass torts. Mr. Grossman's deep-rooted commitment to his clients and practice has led to his being a frequent
speaker and national advocate for victim's rights. Mr. Grossman currently serves on The Board of Directors of the New York State
Trial Lawyers Association, The Executive Committee of the Association of Trial Lawyers of America, and is a member of the Mass
Tort Trial Lawyers Association, the Million Dollar Advocates Forum and the leaders Forum of the American Association of Justice.
Mr. Grossman has been a member of the Esquire Bank board of directors since 2013. Mr. Grossman provides the Board with an important
insight into the legal industry and experience with managing and overseeing a business.
Russ M. Herman, Director.
Mr.
Herman has been senior partner at the law firm Herman, Herman & Katz, L.L.C., a national law firm headquartered in New Orleans,
Louisiana, since 1966. Mr. Herman is the past president of the Association of Trial Lawyers of America, Civil Justice Foundation,
Roscoe Pound Foundation and the American Association of Justice. He is an author, frequent speaker at law schools and national
legal seminars and conventions. Mr. Herman is a member of the National Trial Lawyers Hall of Fame. Mr. Herman has been a member
of the Esquire Bank board of directors since 2007 and provides the Board with valuable insight into the legal industry.
Janet Hill, Director.
Ms. Hill
has served as Principal at Hill Family Advisors since 2008, where she oversees her family's assets and investments. From 1981 until
her retirement in 2010, Ms. Hill was the owner of and served as Vice President of Alexander & Associates, Inc., a management
consulting firm where she provided advice and counseling to major corporations on policies and procedures to achieve and maintain
an inclusive workforce. She is currently a member of the boards of directors of the Carlyle Group, Dean
Foods Company and Echo360. Ms. Hill is a former director of Wendy's/Arby's Group, Inc. and Sprint Nextel Corporation.
She also serves on the Board of Trustees at Duke University, John F. Kennedy Center for the Performing Arts, the Knight Commission
on Intercollegiate Athletics, and the Wolf Trap Foundation. Ms. Hill has a Bachelor of Arts from Wellesley College and a Master
of Arts from the University of Chicago, both in Mathematics. Ms. Hill has been a member of the Esquire Bank board of directors
since 2016. Ms. Hill provides the Board with an important business and strategic insight.
Robert J. Mitzman, Director.
Mr.
Mitzman is Founder, Chairman, President and Chief Executive Officer of the Quick Group of Companies since 1981, having amassed
more than 35 years of experience in the worldwide specialized courier industry. The Quick Group of Companies serves as a provider
of worldwide-mission-critical logistics and transportation solutions. Mr. Mitzman previously served on the Board of Directors for
Perfumania Holdings as well. Mr. Mitzman has been a member of the Esquire Bank board of directors since 2007 and provides the Board
with extensive executive experience as a Chief Executive Officer, including leading an organization with global operations, experience
in human resources and growing a business.
John Morgan, Director.
Mr. Morgan
founded Morgan & Morgan in 1988, to represent the people, not the powerful. Under his leadership and vision, Morgan & Morgan
grew to become a prominent national law firm, with offices throughout North America and Europe, employing more than 300 lawyers
and a support staff of 1,400. Mr. Morgan lectures across the country on the practice of law. He has been an active member of the
Florida Justice Association and served as a FLAG trustee. Mr. Morgan has also received Martindale-Hubbell's esteemed "AV"
rating, which recognizes lawyers with the highest ethical standards and professional ability. Mr. Morgan attended the University
of Florida and the Levin School of Law University of Florida, where Mr. Morgan serves as a member of the Board of Trustees. Mr.
Morgan has been a member of the Esquire Bank board of directors since 2015. Mr. Morgan provides the Board with valuable insight
into the legal industry and experience with managing and overseeing a business.
Richard T. Powers, Director.
Mr.
Powers served as Esquire Bank's President and Chief Executive Officer since Esquire Bank's pre-opening organizational stage in
2005 through 2008. Prior to joining Esquire Bank, Mr. Powers was President, U.S. Direct Services for Fiserv CBS. Mr. Powers has
over 40 years of experience in all areas of the financial services industry, both banking and brokerage. He has served as President
and Chief Operating Officer of
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Waterhouse National Bank and Executive Vice
President and Chief Operations Officer of North Fork Bank, among other banking positions. Since 2009, Mr. Powers has been the owner
of RT Powers & Associates, a banking and financial services consultant firm and he is recognized as an expert witness for banking
technology patent infringement. Mr. Powers is a founding organizer of Esquire Bank. Mr. Powers provides the Board with important
experience and insight into the financial services industry.
Andrew C. Sagliocca, President, Chief
Executive Officer and Director.
Mr. Sagliocca served as Esquire Bank's Chief Financial Officer when he joined Esquire Bank
in February 2007. He became Esquire Bank's Chief Executive Officer in January 2009. Prior to joining Esquire Bank, Mr. Sagliocca
was Senior Vice President and Corporate Controller of North Fork Bank from 1999 to 2007. Mr. Sagliocca has more than 27 years of
experience in the financial services industry. Mr. Sagliocca's extensive experience in the financial services provides the
Board with a unique perspective on Esquire Bank's business and strategic direction.
Dennis Shields, Executive Chairman
of the Board.
Mr. Shields is the Executive Chairman of the Board of Directors and was a founding organizer of Esquire Bank.
Since its inception in 2000, Mr. Shields has served as Chief Executive Officer of Plaintiff Funding Corp. (dba LawCash),
a New York-based specialty finance company that provides financial services products. Since 2014, Mr. Shields has been serving
as the Chairman at YieldStreet, an online platform for alternative investments and he is also the Chairman of Keeps America, a
company that works with law firms, disability advocates, and third-party administrators to distribute settlement awards and government
benefits to clients through its prepaid card. Mr. Shields served as a lay member of the Grievance Committee to the Second and Eleventh
Judicial Departments appointed by presiding judge from 1996 to 2004 and previously served on the New York State Health Information
and Quality Improvement Committee. Mr. Shields has authored two books and is a frequent speaker in both the legal and finance community.
Mr. Shields' extensive experience in both the financial services and legal industry provides the Board with an important
perspective on Esquire Bank's business and strategic direction.
Jack Thompson, Director
. Since
2010, Mr. Thompson has been the Head of Financial Services Investments at Gapstow Capital Partners, an alternative investment firm
based in New York City. Mr. Thompson is responsible for the firm's investments within the banking industry and is a member of the
Gapstow Capital Partners Investment Committee. Prior to joining Gapstow Capital Partners, Mr. Thompson held positions at Deutsche
Bank Securities, Goldman Sachs, Novantas, and Booz Allen Hamilton. He serves as Director on the Boards of Coastal Financial Corporation
(and its subsidiaries) in Everett, Washington and Seaside National Bank in Orlando, Florida. He previously was a Director on the
Board of Pan Pacific Bank in Fremont, California. Mr. Thompson has been a member of the Board since 2016. He graduated from Yale
University with a B.A. in History and he received his M.B.A. with honors from the University of Chicago with concentrations in
Finance and Accounting. Mr. Thompson is also a former 1st Lieutenant in the Armor Branch of the US Army Reserve. Mr. Thompson provides
the Board with important experience and insight into the financial services industry. In connection with the purchase of our capital
stock in 2014, we granted CJA Private Equity Financial Restructuring Master Fund I, LP the right to designate a director so long
as it, together with its affiliates, beneficially owns at least 4.0% (four percent) of our total outstanding capital stock. Mr.
Thompson is the designee of CJA Private Equity Financial Restructuring Master Fund I, LP.
Kevin Waterhouse, Director.
Mr.
Waterhouse is Vice President and Investment Advisor of L.M. Waterhouse & Company, a Valhalla, New York-based registered investment
advisory firm. Mr. Waterhouse has worked at L.M. Waterhouse since 2009. Mr. Waterhouse previously served as First Vice President
– Operations & Product Development of Waterhouse National Bank. Mr. Waterhouse is a founding organizer of Esquire Bank.
Mr. Waterhouse provides the Board with a valuable perspective on general business oversight as well as on potential strategic initiatives.
Selig A. Zises, Director.
Mr.
Zises is a retired investor. Mr. Zises was the founder and CEO of Integrated Resources, a financial services company, from 1969
to 1988. Mr. Zises is a founding organizer of Esquire Bank. Mr. Zises' extensive experience in the financial services industry
provides the Board with an important perspective on the Bank's business and strategic direction.
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Executive Officers who are not Directors
Eric S. Bader, Executive Vice President,
Chief Financial Officer, Treasurer and Corporate Secretary.
Prior to his appointment as Executive Vice President in February
2011, Mr. Bader served as our Senior Vice President, Chief Financial Officer and Treasurer since January 2009. Prior to this, Mr.
Bader served as Esquire Bank's Senior Vice President and Treasurer, since joining Esquire Bank in January 2008. Prior to
joining Esquire Bank, Mr. Bader was Vice President at Goldman Sachs and served as a Vice President and Investment Officer at North
Fork Bank. Mr. Bader has 17 years of experience in the financial services industry.
Ari P. Kornhaber, Executive Vice President,
Director of Sales
. Mr. Kornhaber has served as Director of Sales at Esquire Bank since 2013. From 2004 to 2013, Mr. Kornhaber
served as National Marketing Director at Plaintiff Funding Holding, Inc. (dba LawCash). Mr. Kornhaber has spoken on the subject
of financing for lawyers, law firms and their clients, and the ethics surrounding the same, at numerous seminars and conferences
across the United States. After receiving his law degree from Touro Law School in New York, Mr. Kornhaber was a practicing plaintiff's
lawyer in New York City with the law firm of Pariser and Vogelman, PC and was a trial attorney for the law firm of Napoli, Kaiser
and Bern, LLC, where he specialized in personal injury, medical malpractice and mass tort litigation.
Board Independence
Under the rules of the NASDAQ Capital Market,
independent directors must comprise a majority of our board of directors within a specified period of time of this offering. The
rules of the NASDAQ Capital Market, as well as those of the SEC, also impose several other requirements with respect to the independence
of our directors. Our board of directors has evaluated the independence of its members and our director nominee based upon the
rules of the NASDAQ Capital Market and the SEC. Applying these standards, our board of directors has affirmatively determined that,
with the exception of Mr. Sagliocca and Mr. Shields, each of our current directors is an independent director, as defined under
the applicable rules. Mr. Sagliocca is not independent because he is an executive officer of Esquire Financial Holdings, Inc. and
Mr. Shields is not independent because he is the executive chairman of Esquire Financial Holdings, Inc.
Election and Classification of Directors
In accordance with
the terms of our charter, our board of directors is divided into three classes, Class I, Class II and Class III, with each class
serving staggered three-year terms and is divided as follows:
·
The Class I directors are Russ M. Herman, Robert J. Mitzman, Kevin C. Waterhouse, Marc Grossman
and Jack Thompson. Their term will expire at the annual meeting of stockholders expected to be held in 2017.
·
The Class II directors are Janet Hill, Anthony Coelho, Richard T. Powers and Andrew J. Sagliocca.
Their term will expire at the annual meeting of stockholders expected to be held in 2018.
·
The Class III directors are Dennis Shields, Selig Zises, Todd Deutsch and John Morgan. Their term
will expire at the annual meeting of stockholders expected to be held in 2019.
Transactions With Certain Related Persons
The Sarbanes-Oxley Act of 2002 generally
prohibits publicly traded companies from making loans to their executive officers and directors, but it contains a specific exemption
from the prohibition for loans made by federally insured financial institutions, such as Esquire Bank, to their executive officers
and directors in compliance with federal banking regulations. At December 31, 2016, all of our loans to directors and executive
officers were made in the ordinary course of business, were made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable loans with persons not related to Esquire Bank, and did not involve
more than the normal risk of collectability or present other unfavorable features. These loans were performing according to their
original terms at December 31, 2016, and were made in compliance with federal banking regulations.
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Committees of the Board of Directors
We conduct business through meetings of
our board of directors and its committees. The board of directors of the Company has established standing committees, including
an Audit Committee, Compensation Committee, a Corporate Governance and Nominating Committee and a Strategic Oversight Committee.
Each of these committees operates under a written charter, which governs its composition, responsibilities and operations. Our
board of directors also may establish such other committees as it deems appropriate, in accordance with applicable law and regulations
and our corporate governance documents.
Audit Committee
.
The Audit
Committee assists the board of directors in fulfilling its responsibilities for general oversight of the integrity of our financial
statements, compliance with legal and regulatory requirements, the independent auditors' qualifications and independence,
and the performance of our internal audit and risk assessment function and independent auditors. Among other things, the Audit
Committee:
·
appoints, evaluates and determines the compensation of our independent auditors;
·
reviews and approves the scope of the annual audit, audit fees and financial statements;
·
reviews disclosure controls and procedures, internal controls, internal audit function and corporate
policies with respect to financial information;
·
oversees investigations into complaints concerning financial matters, if any;
·
reviews related party transactions as required; and
·
annually reviews the Audit Committee charter and the committee's performance.
The Audit Committee works closely with management
as well as our independent auditors. The Audit Committee has the authority to obtain advice and assistance from and receive appropriate
funding to engage outside legal, accounting or other advisors as the Audit Committee deems necessary to carry out its duties.
The Audit Committee is composed solely of
members who satisfy the applicable independence and other requirements of the SEC and the NASDAQ Capital Market for Audit Committees
and at least one of its members is an "audit committee financial expert." The Audit Committee has adopted a written
charter that among other things, specifies the scope of its rights and responsibilities. The charter will be available on our website
at
www.esquirebank.com
.
Compensation Committee
.
The
Compensation Committee is responsible for discharging the board of directors' responsibilities relating to compensation of
the executives and directors. Among other things, the Compensation Committee:
·
evaluates compensation strategies;
·
reviews and approves objectives relevant to executive officer compensation;
·
evaluates performance and determines the compensation of the Chief Executive Officer and other
executive officers in accordance with those objectives;
·
reviews and oversees compensation and benefit plans;
·
recommends to the board of directors compensation for directors;
·
prepares the Compensation Committee report required by SEC rules to be included in our annual report;
and
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·
annually reviews the Compensation Committee charter and the committee's performance.
The Compensation Committee is composed solely
of members who satisfy the applicable independence requirements of the SEC and the NASDAQ Capital Market. The Compensation Committee
has adopted a written charter that, among other things, specifies the scope of its rights and responsibilities. The charter will
be available on our website at
www.esquirebank.com
.
Corporate Governance and Nominating
Committee
. The Corporate Governance and Nominating Committee is responsible for making recommendations to our board of
directors regarding candidates for directorships and the size and composition of our board of directors. In addition, the Corporate
Governance and Nominating Committee is responsible for overseeing our corporate governance guidelines and reporting and making
recommendations to our board of directors concerning governance matters. Among other things, the Corporate Governance and Nominating
Committee:
·
identifies qualified individuals to be directors consistent with the criteria approved by the board
of directors and recommending director nominees to the full board of directors;
·
reviews the structure of the committees of the board of directors;
·
develops and recommends procedures for reviewing shareholder recommendations for director nominees;
·
develops the Company's code of business conduct and ethics;
·
oversees management succession planning;
·
leads the board of directors in its annual performance review;
·
develops and recommends corporate governance guidelines; and
·
annually reviews the Corporate Governance and Nominating Committee's charter and the committee's
performance.
The Corporate Governance and Nominating
Committee is composed solely of members who satisfy the applicable independence requirements of the SEC and the NASDAQ Capital
Market. The written charter for our Corporate Governance and Nominating Committee will be available on our website at
www.esquirebank.com
.
Strategic Oversight Committee
.
The Strategic Oversight Committee is responsible for oversight of strategic planning, capital planning, contingency planning and
new product planning. Among other things, the Strategic Oversight Committee:
·
reviews Esquire Bank's Strategic Business and Capital Plan on a continual basis and provide recommendations to the Board
for modifications as deemed necessary, based on:
o
changing needs of Esquire Bank stakeholders;
o
changes in Esquire Bank's external environment;
o
changes in Esquire Bank's internal situation that may affect the strategy of Esquire Bank;
o
the need to ensure continued alignment of the strategy with the Board's preferred risk profile for Esquire Bank; and
o
regulatory requirements and considerations;
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·
monitors management's compliance with the requirements of the Strategic Business and Capital Plan;
·
reviews new products, services or lines-of-business; and
·
ensures that proper processes, personnel and control systems are in place to monitor implementation and adherence to the Strategic
Business and Capital Plan and the operating goals and objectives contained therein.
Code of Business Conduct and Ethics
Our board of directors has adopted a code
of business conduct and ethics (our "Code of Ethics") that applies to all of our directors, officers and employees,
including our principal executive officer, principal financial officer, principal accounting officer and persons performing similar
functions. The Code of Ethics is available upon written request to Corporate Secretary, Esquire Financial Holdings, Inc., 100 Jericho
Quadrangle, Suite 100, Jericho, New York 11753.
If we amend or grant any waiver from a provision
of our Code of Ethics that applies to our executive officers, we will publicly disclose such amendment or waiver on our website
and as required by applicable law, including by filing a Current Report on Form 8-K.
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EXECUTIVE COMPENSATION
As an emerging growth
company under the JOBS Act, we have opted to comply with the executive compensation disclosure rules applicable to "smaller
reporting companies" as such term is defined in the rules promulgated under the Securities Act, which permit us to limit
reporting of executive compensation to our principal executive officer and our two other most highly compensated executive officers,
which are referred to as our "named executive officers."
The compensation reported
in the Summary Compensation Table below is not necessarily indicative of how we will compensate our named executive officers in
the future. We will continue to review, evaluate and modify our compensation framework to maintain a competitive total compensation
package. As such, and as a result of our becoming a publicly traded company, the compensation program following this offering could
vary from our historical practices.
Our named executive officers,
which consist of our executive chairman, principal executive officer and the Company's two other most highly compensated
executive officers, are:
·
Dennis Shields, Executive Chairman of the Board
·
Andrew C. Sagliocca, President, Chief Executive Officer and Director
·
Eric S. Bader, Executive Vice President, Chief Financial Officer,
Treasurer and Corporate Secretary
·
Ari P. Kornhaber, Executive Vice President and Director of Sales
Summary Compensation Table
The following table sets forth information
regarding the compensation paid, awarded to, or earned for our fiscal years ended December 31, 2016 and 2015 for each of our named
executive officers.
Summary
    Compensation Table
Name and Principal Position
Year
Salary
($)
Bonus
($)
Stock
Awards
($)
Option
Awards
($)(1)
All
    Other
Compensation
($)(2)
Total
($)
Dennis Shields
2016
$
445,096
$
100,000
¾
$
366,415
$
6,580
$
918,091
Executive Chairman
2015
$
233,654
$
100,000
¾
$
465,252
$
114
$
799,020
Andrew C. Sagliocca
2016
$
426,000
$
100,000
¾
$
210,283
$
35,146
$
771,429
Director, President and Chief Executive Officer
2015
$
311,538
$
100,000
¾
$
87,234
$
25,374
$
524,146
Eric S. Bader
2016
$
363,077
$
100,000
¾
$
105,141
$
26,805
$
595,023
Executive Vice President, Chief Financial Officer, Treasurer and Corporate Secretary
2015
$
311,538
$
75,000
¾
$
58,157
$
20,090
$
464,785
Ari P. Kornhaber
2016
$
363,061
$
100,000
¾
$
105,141
$
51,805
$
620,007
Executive Vice President and Director of Sales
2015
$
311,538
¾
¾
$
29,077
$
120,090
$
460,705
(1)
These amounts represent the aggregate
                                         grant date fair value for outstanding stock option awards granted during the year indicated,
                                         computed in accordance with FASB ASC Topic 718. The assumptions used to determine the
                                         value of stock options are described in Note 4 of the Notes to the Interim Condensed
                                         Consolidated Financial Statements and see  Note 9 of the Notes to the Consolidated
                                         Financial Statements. The actual value, if any, realized by an executive officer from
                                         any option will depend on the extent to which the market value of the common stock exceeds
                                         the exercise price of the option on the date the option is exercised. Accordingly, there
                                         is no assurance that the value realized by an executive officer will be at or near the
                                         value shown above.
(2)
The amounts in this column represent all other compensation not reported in prior columns in this table, including perquisites,
the aggregate value of which exceeds $10,000. This column consists of medical, dental, vision disability, life, AD&D, car allowances
or other benefits, and for Mr. Kornhaber, it also consists of sales commissions.
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Table of Contents
Employment Agreements
The Company and Bank have jointly entered
into employment agreements with Dennis Shields, our Executive Chairman and Andrew C. Sagliocca, our President and Chief Executive
Officer, each with an initial term of three years and have also entered into employment agreements with Eric Bader, our Executive
Vice President and Chief Financial Officer, and with Ari Kornhaber, our Executive Vice President and Director of Sales, each with
an initial term of two years. The agreements provide for daily automatic extensions, unless the executives' are provided
with written notice of the discontinuance of such automatic extensions by the Company's or Bank's Board of Directors
at any time by delivery of a written notice to such executive in accordance with the procedures set forth in the agreement, in
which event the agreement shall expire at the end of 36 months (24 months with respect to Mr. Bader's and Kornhaber's
agreement) following the date of the non-extension notice. Under the employment agreements, the 2017 base salary for Messrs. Shields,
Sagliocca, Bader, and Kornhaber is $475,000, $475,000, $400,000 and $400,000, respectively. The base salaries are reviewed at least
annually and may be increased but not decreased. In addition to the base salary, each agreement provides that the executive will
receive all benefits provided to full-time employees of the Company or Bank, including among other things, bonus plans, retirement
plans, pension plans and fringe benefits applicable to executive personnel, including guaranteed stock-based awards, in the case
of Mr. Shields, equal to not less than 25% of the each type of awards granted under the plan; in the case of Mr. Sagliocca, of
no less than the greater of (i) 12.5% of the total number of such type of awards granted for such calendar year to all persons
under all such Stock Plans, or (ii) 50% of the total number of such type of awards granted for such calendar year to the Company's
Executive Chairman under all such Stock Plans; and in the case of Mr. Bader and Mr. Kornhaber, not less than 50% of the total number
of such awards granted to the Chief Executive Officer. Additionally, under the agreements, the executives will receive monthly
automobile allowances and a life insurance policy in an amount equal to at least three (3) times, in the case of Messrs. Shields
and Sagliocca, and two (2) times, in the case of Messrs. Bader and Kornhaber, of the executive's average (i) base salary
and (ii) bonus payable under the bonus plan for the prior two full calendar years.
The agreements permit the Company or Bank
to terminate the executive's employment for cause (as defined in the agreement) at any time. In the event the we choose to
terminate an executive's employment (i) for reasons other than for cause, his death or disability or his retirement (as defined
in the agreement), (ii) in the event of the executive's resignation from the Company or Bank for "good reason"
upon (a) failure to be reappointed to his current office, (b) a material change in his functions, duties or responsibilities,
(c) the liquidation or dissolution of the Company or Bank, or (d) a breach of the agreement by the Company or Bank, then in
any such event, the executive, or in the event of death, his beneficiaries, would be entitled to receive a cash severance payment.
The cash severance payment would be an amount equal to (A) the greater of: (i) his base salary payable during the remaining term
of the agreement or (ii) 100% of his base salary as of the termination date, plus (B) the dollar amount of his bonus paid to the
executive for the most recently completed calendar year multiplied by the greater of (i) the number of full and partial years in
the remaining term of the agreement or (ii) one (1). In addition, each executive would be entitled to continue to receive for a
period of eighteen (18) months (the "COBRA period") continuing medical and dental insurance coverage provided to former
employees of the Company or Bank at no cost to executive. Each executive also will be entitled to a lump sum cash payment payable
within 30 days following his termination equal to the sum of the estimated cost of medical and dental coverage from the last day
of the COBRA period through the remaining term of the agreement plus the expense of converting his Company-paid life insurance
to an individual life insurance policy.
In the event that after the occurrence of
a change in control, one of the executive's employment is (i) involuntarily terminated within 24 months (other than for Cause),
(ii) terminated by him for good reason within 24 months, or (iii) terminated by him for any reason (other than good reason) within
12 months, then the Company or Bank will pay him a cash payment equal to 299% of his average annual compensation in the case of
Messrs. Shields and Sagliocca (200% in the case of Messrs. Bader and Kornhaber) over the five most recently completed calendar
years. For these purposes, annual compensation shall include his base salary, any other taxable income, including the income recognized
on the vesting of restricted stock or exercise of stock options, commissions, bonuses (whether paid or accrued), as well as retirement
benefits, director or committee fees and fringe benefits paid or to be paid during any such year, amounts paid to the profit sharing
plan or employee stock ownership plan, if any, and other retirement contributions or benefits, including to any tax-qualified plan
(whether or not taxable) made or accrued on behalf of executive. Such payment will be made to him within 30 days following his
termination of employment. In addition, each executive will be entitled to the same continuation of health care coverage provided
in the immediately preceding paragraph, as well as the cash lump sum payment to equal to the estimated cost of his and his family's
medical and dental coverage from the last day of the COBRA period through the remaining term of the agreement plus the expense
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Table of Contents
of converting his Company-paid life insurance to an individual life insurance policy. If the payment and benefits payable to an
executive following a change in control would result in an excess parachute and excise taxes payable by the executive, the Company
and or Esquire Bank will promptly pay or reimburse the executive for such taxes, as well as any other federal, state or local taxes
that result from the Company's or Bank's payment of such taxes.
In exchange for Esquire Bank's and
Company's promises under the employment agreements, each executive agrees that in the event of his termination under the
employment agreement, other than due to disability or a change in control, he agrees that for a period of one year following such
termination he will not compete with, or solicit employees or customers, suppliers vendors of the Company or Esquire Bank to terminate,
reduce, limit or change their business relationship with the Company or Esquire Bank, and further will not disclose confidential
information or disparage the Company or Bank.
Incentive Compensation
Plans
2007 Stock Option
Plan.
At the May 23, 2007 annual meeting, the stockholders of Esquire Bank approved the Esquire Bank 2007 Stock Option
Plan. Under this plan, directors and key principal officers of Esquire Bank, and other persons designated by the Compensation Committee,
are eligible to participate in the 2007 Stock Option Plan. Pursuant to the 2007 Stock Option Plan, grants may be made of the following:
(i) options to purchase Common Stock intended to qualify as incentive stock options under Section 422 of the Internal Revenue Code,
which may only be granted to employees of Esquire Bank; and (ii) options that do not so qualify ("nonstatutory options"),
which may be granted to nonemployee directors, officers and other employees, and others. In connection with Esquire Bank's
reorganization as the wholly-owned subsidiary of the Company in 2011, the 2007 Stock Option Plan was assumed by the Company.
The 2007 Stock Option
Plan reserves 270,000 shares of the Company common stock for issuance to the employees, directors of Esquire Bank and others through
the grants of stock options. Options to purchase 262,500 shares of the Company's common stock have been granted to officers,
directors and others.
Under the 2007 Stock Option
Plan, unless the Compensation Committee determines otherwise, all option grants vest over a 5-year time period, with 20% of the
grant vesting per year commencing one year after the date of grant. The Committee shall determine the term during which each option
may be exercised, but in no event shall either a non-statutory option or an incentive stock option be exercisable in whole or in
part more than 10 years from the date of grant.
Upon the termination of
employment or termination of an outside director's service from the Board of Directors for any reason other than death, disability,
a change in control, or termination for cause, in each case as defined in the 2007 Stock Option Plan, an optionee's stock
options will be exercisable only as to those shares that were immediately exercisable by such individual at the date of termination
and only for a period of three (3) months following termination. In the event of termination for cause all rights under the participant's
stock options shall expire upon termination. Upon termination of employment or from service on the Board of Directors, due to death,
disability or following a change in control, all stock options, whether or not exercisable at such time, will be exercisable for
a period of one (1) year following the date of termination of employment or board service. In certain circumstances, incentive
stock options will cease to be treated as such if exercised more than three months after the optionee ceases to perform services
for Esquire Bank. The maximum number of shares that may be subject to all awards granted to any one employee of Esquire Bank is
67,500. The maximum aggregate number of shares that may be awarded pursuant to the exercise of incentive stock options is 67,500.
Generally, all incentive
stock options granted under the Stock Option Plan will be nontransferable except by will or in accordance with the laws of descent
and distribution or pursuant to a domestic relations order, except as otherwise permitted by the Committee. The Compensation Committee
may permit a participant to designate a beneficiary to exercise or receive any rights that may exist under the 2007 Stock Option
Plan upon the participant's death.
Shares as to which awards
may be granted under the 2007 Stock Option Plan, and shares then subject to awards, will be adjusted by the Committee in the event
of any merger, consolidation, reorganization, recapitalization, stock dividend, pro rata return of capital, stock split or other
change in the corporate structure of Esquire Bank or other increases or decreases in the number of shares outstanding without the
receipt or payment of consideration by Esquire Bank.
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Table of Contents
2011 Stock Compensation
Plan.
On May 26, 2011, the stockholders of the Company approved its 2011 Stock Compensation Plan. The 2011 Stock Compensation
Plan authorizes the issuance of up to 404,607 shares of Company common stock pursuant to grants of incentive and non-qualified
stock options, restricted stock awards and restricted stock unit awards to officers, employees, directors and consultants of the
Company and Esquire Bank. On August 26, 2015, the stockholders of the Company approved of an amendment to the Company's 2011
Stock Compensation Plan to authorize 350,000 additional shares for issuance under that plan. Options to purchase 750,545 shares
of common stock have been granted to officers, directors and others as of the date of this document and 4,062 shares remain available
for grant under the 2011 Stock Compensation Plan.
The 2011 Stock Compensation
Plan is administered by the members of the Compensation Committee of the Board of the Company, which has authority to make grants
under the plan and to determine the types of awards and the number of shares of stock subject to any award, in its discretion.
The Compensation Committee has full and exclusive power within the limitations set forth in the 2011 Stock Compensation Plan to
make all decisions and determinations regarding the selection of participants and the granting of awards; establishing the terms
and conditions relating to each award; and interpreting and otherwise construing the 2011 Stock Compensation Plan.
Employees, directors,
officers and consultants of the Company or its subsidiaries are eligible to receive awards under the 2011 Stock Compensation Plan,
except that non-employees may not be granted incentive stock options.
The Compensation Committee
may, in its discretion, grant any or all of the types of awards described in the 2011 Stock Compensation Plan to eligible participants.
The Compensation Committee will, in its discretion, determine the types of awards made and establish other terms and conditions
applicable to the award. Each award granted under the 2011 Stock Compensation Plan may be evidenced by an award agreement approved
by the Committee, which sets forth the terms and conditions of the award, including vesting and specific performance goals or measures
established in connection with each award.
The Committee may determine
the type of award and the terms and conditions of each award under the 2011 Stock Compensation Plan. Awards under the 2011 Stock
Compensation Plan will be either awards that (i) vest over a period of years (or immediately) and do not contain specific performance
measures for vesting to occur, or (ii) awards that are based on performance measures. Awards also may be granted in any combination
determined by the Committee, consisting of stock options, restricted stock awards and restricted stock unit awards.
In connection with any
award, the Compensation Committee may grant a tax gross-up right to the holder of an award to reimburse the holder with the taxes
that may be due and payable under Section 280G of the Internal Revenue Code of 1986, as amended, as a result of the vesting of
an award upon the occurrence of a change in control.
If the right to become
vested in an award under the 2011 Stock Compensation Plan is conditioned on the completion of a specified period of service with
the Company or its subsidiaries, without the achievement of performance measures or objectives, then the required period of service
for full vesting shall be determined by the Committee and evidenced in the award agreement. Unless otherwise specified in an award
agreement, the vesting period for an award of restricted stock shall be three years with respect to an outside director and five
years with respect to an officer or an employee.
The vesting date of performance-based
awards is the date on which all the performance measures are attained and the performance period is concluded. Any unvested performance-based
awards for which the performance measures are not satisfied will be forfeited without consideration. Unless otherwise provided
to the contrary in an award agreement, each stock option, restricted stock award or restricted stock unit granted under the 2011
Stock Compensation Plan shall vest immediately upon the employee or director's death, disability or retirement.
Unless otherwise
provided in an award agreement, in the event of a participant's termination of service for any reason other than
disability, retirement or death or termination for cause, then (i) any stock options shall be exercisable only as to those
awards that were vested on the date of termination of service and only for a period of three months following termination,
and (ii) any restricted stock awards and other awards that have not vested as of the date of termination of service shall
expire and be forfeited.
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In the event of termination
for cause, any awards that have not vested, or have vested but have not been exercised (in the case of stock options) shall expire
and shall be forfeited. Unless otherwise provided in an award agreement, upon termination of service due to death, disability or
retirement, all stock options shall be exercisable as to all shares subject to an outstanding award, whether or not then exercisable,
and all other awards shall become fully vested at the date of termination of service. Stock options may be exercised for a period
of one year following such termination of service. Under the Code, no stock option shall be eligible for treatment as an incentive
stock option in the event such option is exercised more than one year following termination of service due to disability, and in
order to obtain incentive stock option treatment by heirs or devisees of the stock option holder, the stock option holder's
death must have occurred while employed or within three months of termination of service.
Upon the occurrence of
a change in control (as defined in the 2011 Stock Compensation Plan) of the Company, the Committee and the Board of Directors may
provide that all stock options shall be assumed or equivalent options shall be substituted by the acquiring corporation, or that
the holders of the stock options shall receive a cash payment for each stock option surrendered equal to the difference between
the cash consideration paid by the acquiring corporation and the exercise price of each option.
Unless otherwise provided
in an award agreement, upon the occurrence of a change in control, all outstanding options then held by a participant will become
fully exercisable and all restricted stock awards and restricted stock unit awards shall be fully earned and vested. In addition,
any performance measure attached to an award under the 2011 Stock Compensation Plan shall be deemed satisfied as of the date of
the change in control.
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Table of Contents
Outstanding Equity Awards
at Fiscal Year End
The following table shows
stock options outstanding for each of our named executive officers as of December 31, 2016.
Option
    Awards
Name
Grant
Date
Number
                                         of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
Number
                                         of
Securities
Underlying
Unexercised
Options
(#)(1)
Unexercisable
Option
Exercise
Price ($)
Option
Expiration
Date
Dennis Shields
06/28/2007
13,500
¾
10.00
06/28/2017
08/01/2014
4,000
6,000
12.50
08/01/2024
09/01/2015
28,456
113,823
12.50
09/01/2025
09/01/2016
¾
101,500
12.50
09/01/2026
Andrew C. Sagliocca
06/28/2007
25,000
¾
10.00
06/28/2017
01/04/2010
27,000
¾
12.50
01/04/2020
08/01/2014
4,000
6,000
12.50
08/01/2024
09/01/2015
5,335
21,342
12.50
09/01/2025
09/01/2016
¾
58,250
12.50
09/01/2026
Eric S. Bader
02/01/2008
5,000
¾
10.00
02/01/2018
01/04/2010
20,000
¾
12.50
01/04/2020
08/01/2014
2,620
3,930
12.50
08/01/2024
09/01/2015
3,557
14,228
12.50
09/01/2025
09/01/2016
¾
29,125
12.50
09/01/2026
Ari P. Kornhaber
08/01/2014
4,000
6,000
12.50
08/01/2024
09/01/2015
1,778
7,114
12.50
09/01/2025
05/02/2016
¾
7,500
12.50
05/02/2026
09/01/2016
¾
29,125
12.50
09/01/2026
(1)
All awards vest in 20% increments on the first, second, third, fourth and fifth anniversary of the
date of grant.
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Table of Contents
Director Compensation
The following table sets
forth for the year ended December 31, 2016 certain information as to total compensation paid to non-employee directors. Messrs.
Shields and Sagliocca do not receive any additional compensation for service on our board of directors and Esquire Bank's
board of directors.
Name
Fees
                                         Earned
or
Paid
                                         in Cash
($)
Stock
Awards
($)
Option
Awards
($)(1)(2)
Total
($)
Anthony Coelho
18,250
¾
72,200
90,450
Todd Deutsch
28,000
¾
¾
28,000
Marc Grossman
9,750
¾
27,075
36,825
Russ M. Herman
25,500
¾
72,200
97,700
Janet Hill
7,500
¾
27,075
34,575
Robert J. Mitzman
9,750
¾
72,200
81,950
John Morgan
6,750
¾
27,075
33,825
Richard T. Powers
32,000
¾
¾
32,000
Jack Thompson (3)
1,500
¾
¾
1,500
Kevin C. Waterhouse
29,250
¾
9,025
38,275
Selig Zises
33,750
¾
¾
33,750
(1)
These amounts represent the aggregate grant date fair value for
                                         outstanding stock option awards granted during the year indicated, computed in accordance
                                         with FASB ASC Topic 718. The assumptions used to determine the value of stock options
                                         are described in Note 4 of the Notes to the Interim Condensed Consolidated Financial
                                         Statements and see Note 9 of the Notes to the Consolidated Financial Statements.
                                         The actual value, if any, realized by a director from any option will depend on the extent
                                         to which the market value of the common stock exceeds the exercise price of the option
                                         on the date the option is exercised. Accordingly, there is no assurance that the value
                                         realized by a director will be at or near the value shown above.
(2)
At December 31, 2016, Messrs. Coelho, Deutsch, Herman, Mitzman, Powers, Waterhouse and
Zises held 42,231, 20,000, 49,231, 51,231, 59,778, 20,392 and 66,801 outstanding stock options, respectively.
(3)
Mr.
Thompson
was appointed to the board
of directors of the Company and Esquire Bank effective September 2016.
Director Fees
Board members of the Company
receive fees for board and committee meetings attended in person. Board members receive $1,500 for each Board meeting, $750 for
each telephonic Board Meeting, and $1,000 for each committee meeting attended.
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Table of Contents
CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS
In addition to the compensation arrangements
with directors and executive officers described in "Executive Compensation" above, the following is a description of
transactions since January 1, 2016, to which we have been a party in which the amount involved exceeded or will exceed $120,000,
and in which any of our directors, executive officers or beneficial holders of more than five percent of our capital stock, or
their immediate family members or entities affiliated with them, had or will have a direct or indirect material interest.
Policies and Procedures Regarding Related Party Transactions
Transactions by the Company or Esquire Bank
with related parties are subject to certain regulatory requirements and restrictions, including Sections 23A and 23B of the Federal
Reserve Act (which govern certain transactions by Esquire Bank with its affiliates) and the Federal Reserve's Regulation O
(which governs certain loans by Esquire Bank to its executive officers, directors and principal stockholders).
Under applicable SEC and NASDAQ rules, related
party transactions are transactions in which we are a participant, the amount involved exceeds $120,000 and a related party has
or will have a direct or indirect material interest. Related parties of the Company include directors (including nominees for election
as directors), executive officers, five percent stockholders and the immediate family members of these persons. Related party transactions
will be referred for approval or ratification to our audit committee. In determining whether to approve a related party transaction,
the Audit Committee will consider, among other factors, the fairness of the proposed transaction, the direct or indirect nature
of the related party's interest in the transaction, the appearance of an improper conflict of interests for any director or executive
officer taking into account the size of the transaction and the financial position of the related party, whether the transaction
would impair an outside director's independence, the acceptability of the transaction to our regulators and the potential violations
of other corporate policies.
Banking Relationships
On September 30, 2016, the Company purchased
a $265,000 participation interest (53%) in a loan that was originated by an entity in which Dennis Shields, a director and executive
officer of the Company, is a principal stockholder. The underlying loan was for the working capital needs of a law firm. The purchase
of the loan participation was approved by our Directors Loan Committee and our Corporate Governance Committee, without the participation
or vote of Mr. Shields. The loan and the Company's participation therein has been repaid in full prior to December 31, 2016.
In 2016, Esquire Bank made a $500,000 loan
to a third-party borrower the proceeds of which were used to lend additional monies to a limited liability company controlled by
Plaintiff Funding Holding, Inc. (DBA LawCash). Mr. Zises, a director of the Company, and Mr. Shields, an executive officer and
a director of the Company, are each principal stockholders of LawCash, and Mr. Shields is the Chief Executive Officer of LawCash.
The loan was made in the ordinary course of business, on substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable transactions with others, and in the opinion of management does not involve more
than a normal risk of collectability, nor does it present other unfavorable features. The loan was approved by the Directors Loan
Committee and Corporate Governance Committee, without participation or vote of Messrs. Shields or Zises. As of March 31, 2017,
the loan was being paid as agreed.
We have engaged, and expect to engage in
the future, in banking transactions in the ordinary course of business with directors, officers, principal stockholders and their
associates and/or immediate family members, on substantially the same terms, including interest rates and collateral on loans,
as those prevailing at the same time for comparable transactions with persons not related to us and that do not involve more than
the normal risk of collectability or present other unfavorable features.
At March 31, 2017, the aggregate amount
of extensions of credit to our directors, executive officers, principal stockholders and their associates was $7.2 million, or
approximately 13.5% of our total equity. At March 31, 2017, unfunded commitments totaled $60,000.
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Table of Contents
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth information
as of May 23, 2017 regarding the beneficial ownership of our common stock, and as adjusted to reflect the completion of this offering:
·
each stockholder known by us to beneficially own more than 5% of our outstanding common stock;
·
each of our directors;
·
each of our named executive officers;
·
all of our directors and executive officers as a group; and
·
each selling stockholder.
We have determined beneficial ownership
in accordance with the rules of the SEC. These rules generally provide that a person is the beneficial owner of securities if such
person has or shares the power to vote or direct the voting of securities, or to dispose or direct the disposition of securities,
or has the right to acquire such powers within 60 days. For purposes of calculating each person's percentage ownership, common
stock issuable pursuant to options exercisable within 60 days are included as outstanding and beneficially owned for that person
or group, but are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Except as
disclosed in the footnotes to this table and subject to applicable community property laws, we believe that each person identified
in the table has sole voting and investment power over all of the shares shown opposite such person's name.
The percentage of beneficial ownership is
based on 5,057,030 shares of our common stock outstanding as of May 23, 2017 and [
·
]
shares to be outstanding after the completion of this offering (or [
·
] shares if
the underwriter exercises its purchase option in full), in each case including [
·
]
shares of restricted stock awarded under our stock incentive plan but not vested as of such date.
Unless otherwise indicated, the address
for each listed stockholder is: c/o Esquire Financial Holdings, Inc., 100 Jericho Quadrangle, Suite 100, Jericho, New York 11753.
Shares
                                         Beneficially Owned as of
May
                                         23, 2017
Shares
                                         Beneficially Owned
After
                                         the Offering
Name
    and Address of
Beneficial Owner
Number
    of Shares
Percent
Shares
to
                                         be
Sold
                                         in
the
Offering
Number
                                         of
Shares
(7)
Percent,
assuming
                                         no
exercise
                                         of
underwriter's
purchase
option
Percent,
assuming
                                         full
exercise
                                         of
underwriter's
purchase
option
Directors:
Dennis Shields
156,356
(1)
3.1
%
Selig A. Zises
242,480
(2)
4.8
%
Todd Deutsch
44,000
(3)
*
John Morgan
63,380
(4)
1.3
%
Russ M. Herman
51,466
(5)
1.0
%
Robert J. Mitzman
83,208
(6)
1.6
%
Kevin C. Waterhouse
104,378
(7)
2.1
%
Marc Grossman
10,000
*
Janet Hill
80
*
Richard T. Powers
62,356
(8)
1.2
%
Anthony Coelho
44,446
(9)
*
Andrew C. Sagliocca
86,335
(10)
1.7
%
Jack Thompson
497,895
(11)
9.8
%
Named Executive Officers (not identified above):
Eric S. Bader
31,177
(12)
*
Ari P. Kornhaber
10,278
(13)
*
All directors and executive officers as a group (15 persons total)
1,487,835
28.2
%
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Table of Contents
5% Stockholders:
CJA Private Equity Financial Restructuring Master Fund I, LP
c/o Gapstow Capital Partners
654 Madison Avenue, Suite 601
New York, New York 10065
497,815
9.8
%
Wolfson Equities, LLC
One State St. Plaza
New York, New York 10004
320,000
6.3
%
Selling Stockholders:
[
·
]
*
Less than 1%
(1)
Includes presently exercisable options to purchase 45,956 shares of the Company's common stock.
Mr. Shields has sole voting and investment power over 93,400 shares and shared voting and investment power over 12,000 shares.
Mr. Shields' wife has sole voting and investment power over 5,000 shares.
(2)
Includes presently exercisable options to purchase
20,560 shares of
the Company's common stock.
(3)
Includes presently exercisable options to purchase
4,000 shares of
the Company's common stock. Mr. Deutsch has sole voting and investment power over 40,000 shares.
(4)
Mr. Morgan has sole voting and investment power over 80 shares and shared voting and investment power
over 63,300 shares.
(5)
Includes presently exercisable options to purchase 11,446 shares of the Company's common stock.
(6)
Includes presently exercisable options to purchase
13,446 shares of
the Company's common stock. Mr. Mitzman has sole voting and investment power over 64,762 shares and shared voting and investment
power over 5,000 shares.
(7)
Includes presently exercisable options to purchase
10,778 shares of
the Company's common stock. Mr. Waterhouse has sole voting and investment power over 18,000 shares and shared voting and
investment power over 75,600 shares.
(8)
Includes presently exercisable options to purchase 4,356 shares of the Company's common stock.
Mr. Powers has shared voting and investment power over 58,000 shares.
(9)
Includes presently exercisable options to purchase
4,446 shares of
the Company's common stock. Mr. Coelho has shared voting and investment power over 40,000 shares.
(10)
Includes presently exercisable options to purchase
61,335 shares of
the Company's common stock. Mr. Sagliocca has sole voting and investment power over 4,000 shares and shared voting and investment
power over 21,000 shares.
(11)
Mr. Thompson has sole voting and investment power over 80 shares. Mr. Thompson is a member of CJA
Private Equity Financial Restructuring GP I Ltd., the general partner of CJA Private Equity Financial Restructuring Master Fund
I, LP, which holds an additional 497,815 shares of the Company's common stock and 66,985 shares of the Company's Series
B Preferred Stock. CJA Private Equity Financial Restructuring GP I Ltd. has designated all voting rights to CJA Private Equity
Financial Restructuring Master Fund I, LP's Investment Manager, Gapstow Capital Partners. Mr. Thompson is an employee of
Gapstow Capital Partners.
(12)
Includes presently exercisable options to purchase
31,177 shares of
the Company's common stock.
(13)
Includes presently exercisable options to purchase 5,778 shares of the Company's common stock
and options exercisable within 60 days to purchase 1,500 shares of the Company's common stock.
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DESCRIPTION OF CAPITAL STOCK
The following is a summary of the material
rights of our capital stock and related provisions of our articles of incorporation and bylaws. This discussion may not contain
all of the information regarding our capital stock that is important to you. Reference is made to the more detailed provisions
of our articles of incorporation and bylaws, copies of which are filed with the SEC as exhibits to the registration statement of
which this prospectus is a part.
General
Our
authorized capital consists of 15,000,000 shares of common stock, $0.01 par value, and 2,000,000 shares of preferred stock, $0.01
par value. At March 31, 2017, there were 5,003,030 shares of common stock outstanding and 66,985 shares of our Series B Preferred
Stock outstanding. All issued and outstanding shares at that date were, and the shares of common stock to be issued upon completion
of this offering will be, fully paid and nonassessable. Immediately following the completion of this offering, we will have
[
·
]
shares of common stock outstanding (assuming the underwriter does not
exercise its option to purchase any additional shares) and 66,985 shares of Series B Preferred Stock outstanding. Also, as of
[
·
]
,
options to purchase
[
·
]
shares
of our common stock held by our employees, officers and directors under our 2007 Stock Option Plan and our 2011 Stock Compensation
Plan were outstanding.
Common Stock
Voting Rights.
All voting
rights are vested in the holders of our common stock, subject to the issuance of preferred stock with voting rights. Any issuance
by our preferred stock with voting rights following the offering may affect the voting rights of the holders of common stock. Except
as discussed below in "—Restrictions on Acquisition of Esquire Financial Holdings," each holder of common stock
will be entitled to one vote per share. Holders of our common stock are not entitled to cumulate their votes in the election of
directors.
Dividends.
Holders of our common stock will be entitled to receive and share equally in such dividends as the
board of directors of the Company may declare out of funds legally available for such payments. If the Company issues preferred
stock following the offering, holders of such stock may have a priority over holders of common stock with respect to the payment
of dividends. We may pay dividends to an amount equal to the excess of our capital surplus over payments that would be owed upon
dissolution to stockholders whose preferential rights upon dissolution are superior to those receiving the dividend, and to an
amount that would not make us insolvent, as and when declared by our board of directors. The holders of common stock of the Company
will be entitled to receive and share equally in dividends as may be declared by our board of directors out of funds legally available
therefor. If the Company issues additional shares of preferred stock, the holders thereof may have a priority over the holders
of the common stock with respect to dividends.
Liquidation or Dissolution.
In the event of a liquidation or dissolution of the Company, holders of our common stock and any participating preferred stock
will be entitled to receive, after payment or provision for payment of all of our debts and liabilities and the preferential rights
of, and the payment of liquidation preferences, if any, on any outstanding shares of preferred stock, all of our assets available
for distribution. If we issue preferred stock following the offering, holders of such stock may have a senior interest over holders
of common stock in such a distribution.
No Preemptive or Redemption Rights.
Holders of our common stock will not have any preemptive rights or redemption rights with respect to any shares of our
capital stock that may be issued. Certain of our stockholders are parties to subscription agreements with the Company in connection
with previous private placement offerings that provide those stockholders with preemptive rights to purchase securities issued
by the Company. However, such preemptive rights do not apply to this offering and will terminate upon completion of this offering.
Exchange Rights.
We have agreed
to provide the holder of our Series B Preferred Stock with the right to exchange its shares of common stock for additional shares
of preferred stock in order to reduce its beneficial ownership of voting common stock to 4.95% of the Company's total outstanding
voting common stock.
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Registration
Rights.
We have agreed to provide the holder of our Series B Preferred Stock with the right to include its common shares
in a registration statement that we are otherwise filing. The "piggyback" registration rights granted to the holder
of our Series B Preferred Stock will apply at the time of this offering.
Following our initial public offering, to the
extent the holder of our Series B Preferred Stock remains a holder of our common stock or our Series B Preferred Stock, it may
exercise its "piggyback" registration rights in connection with future offerings of our common stock, other than registration
statements filed on Forms S-4 or
S-8.
Preferred Stock
None of the shares of the Company's
authorized preferred stock will be issued as part of the offering. Preferred stock may be issued with preferences and designations
as our board of directors may from time to time determine. Our board of directors may, without stockholder approval, issue shares
of preferred stock with voting, dividend, liquidation and conversion rights that could dilute the voting strength of the holders
of the common stock and may assist management in impeding an unfriendly takeover or attempted change in control.
Series B Preferred Stock
Voting Rights.
The holder
of our Series B Preferred Stock has no voting rights, except as may be provided for under the MGCL.
Dividends.
The holder of our
Series B Preferred Stock is entitled to receive ratable dividends when dividends are concurrently declared and payable on the shares
of common stock.
Liquidation or Dissolution.
In the event of any liquidation, dissolution or winding up of the affairs of the Company, the assets of the Company or proceeds
thereof (whether capital or surplus) remaining available for distribution to stockholders of the Company after payment in full
of all claims of creditors of the Company and all amounts due on any preferred stock or other securities of the Company that are
superior and prior in rank to the common stock and the Series B Preferred Stock will be distributed to the holders of the
common stock and the Series B Preferred Stock pro rata based, respectively, on the number of shares of common stock outstanding
at such time and the number of shares of common stock into which the Series B Preferred Stock outstanding at such time is then
convertible.
Preemptive or Redemption Rights
.
The holder of our Series B Preferred Stock currently has preemptive rights that allow such stockholder to maintain its percentage
ownership in our common stock in the event the Company issues any additional common shares in a subsequent offering. However, such
preemptive rights do not apply to this offering and will terminate upon completion of this offering.
Conversion and Transfer Rights.
The
shares of Series B Preferred Stock are not convertible into common stock by the holder or any affiliate of such holder and may
only be transferred by the holder or such affiliate (i) to an affiliate of such holder, (ii) to the Company, (iii) in a widespread
public distribution, (iv) in a transfer in which no transferee (or group of associated transferees) would receive 2% or more of
any class of voting securities of the Company, or (v) to a transferee that would control more than 50% of the voting securities
of the Corporation without any transfer from the initial holder or any affiliate of such initial holder.
However, we may agree to permit the holder
of our Series B Preferred Stock to exchange shares of preferred stock for shares of our common stock in order to allow it to maintain
its percent ownership of the outstanding common stock of the Company. Additionally, if at any time any Series B Preferred Stock
held by the holder are transferred to any person other than an affiliate of the holder pursuant to either: (i) in a widespread
public distribution; (ii) a transfer in which no transferee (or group of associated transferees) would receive 2% or more of any
class of voting securities of the Company; or (iii) a transferee that would control more than 50% of the voting securities of the
Company without any transfer from the initial holder or any affiliate of such initial holder, such shares would immediately and
without further action on the part of any person convert automatically to common shares, on a one for one basis, subject to compliance
with the requirements of any federal banking regulators with respect to restrictions on the transfer of non-voting shares.
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In addition, the holder of our Series B
Preferred Stock has the right to exchange its shares of common stock for additional shares of preferred stock in order to reduce
its ownership of voting common stock to 4.95% of the Company's total outstanding voting common stock.
Registration
Rights.
We have agreed to provide the holder of our Series B Preferred Stock with the right to include its common or preferred
shares in a registration statement that we are otherwise filing. The "piggyback" registration rights granted to the
holder of our Series B Preferred Stock will apply at the time of this offering.
Following our initial public offering, to
the extent the holder of our Series B Preferred Stock remains a holder of our common stock or our Series B Preferred Stock, it
may exercise its "piggyback" registration rights in connection with future offerings of our common stock, other than
registration statements filed on Forms S-4 or
S-8.
Restrictions on Acquisition of Esquire Financial Holdings
The following is a general summary of the
material provisions of our Articles of Incorporation and Bylaws and the MGCL that may have an "anti-takeover effect."
Such provisions might discourage future takeover attempts by impeding efforts to acquire us or stock purchases in furtherance of
such an acquisition.
Authorized Shares of Capital Stock.
Our
Articles of Incorporation authorizes the issuance of up to 15,000,000 shares of common stock, $0.01 par value, and 2,000,000 shares
of preferred stock, $0.01 par value. Shares of preferred stock with voting rights could be issued and would then represent an additional
class of stock required to approve any proposed acquisition. This preferred stock, together with authorized but unissued shares
of our common stock, could represent additional capital required to be purchased by an acquiror. Issuance of such additional shares
may also dilute the voting interest of our stockholders.
Generally, Esquire Financial Holdings is
authorized to issue preferred stock from time to time in one or more series subject to applicable provisions of law, and the board
of directors is authorized to fix the designations, and relative preferences, limitations, voting rights, if any, including without
limitation, offering rights of such shares (which could be multiple or as a separate class). In the event of a proposed merger,
tender offer or other attempt to gain control of the Company that the board of directors does not approve, it may be possible for
the board of directors to authorize the issuance of a series of preferred stock with rights and preferences that would impede the
completion of the transaction. An effect of the possible issuance of preferred stock therefore may be to deter a future attempt
to gain control of the Company. The board of directors has no present plan or understanding to issue any preferred stock.
Directors.
The Board of Directors
is classified into three classes, one of which is elected each year for a three year term. Also, for so long as CJA Private Equity
Financial Restructuring Master Fund I, LP beneficially owns at least 4.0% of the total outstanding capital stock of Esquire Financial
Holdings, Esquire Financial Holdings shall use its reasonable best efforts to cause one person nominated by CJA Private Equity
Financial Restructuring Master Fund I, LP to be elected to serve on the Board of Directors of Esquire Financial Holdings and Esquire
Bank. A director may be removed from office at any time, for any reason by the majority vote of the holders of the then-outstanding
capital stock of Esquire Financial Holdings entitled to vote generally in the election of directors voting together as a single
class. These provisions may make it more difficult to remove a director, and may it more difficult for an acquiror to acquire control
of the company without negotiating with the Board of Directors, and may therefore have an anti-takeover effect.
Actions by Stockholders.
Our
Bylaws provide that special meetings of the stockholders may be called only by a majority of the board of directors, the President,
or the Secretary at the written request of the holders of at least a majority of all shares entitled to vote. The Bylaws provide
that notice of stockholder proposals for new business to be considered at an annual meeting must be submitted, in general, not
less than ten or more than 90 days before the meeting.
In general, our Articles of Incorporation
may be amended in the manner prescribed under Maryland law. The Board of Directors may amend the Articles of Incorporation, without
further stockholder action, to increase or decrease the aggregate number of shares of stock or the number of shares of stock of
any class or series that Esquire Financial Holdings has authority to issue. No proposed amendment or repeal of any provision of
the Articles of Incorporation may be submitted to stockholders unless the Board of Directors has (1) approved the proposed amendment
or repeal, (2) determined that it is advisable, and (3) directed that it be submitted for consideration at either an annual or
special meeting of stockholders. The amendment or repeal of any provision of the Articles of Incorporation shall be approved by
at least a majority vote.
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Limitation of Director and Officer
Liability; Indemnification.
As permitted by the MGCL, our Articles of Incorporation eliminate the liability of directors
and officers to Esquire Financial Holdings or its stockholders to the fullest extent permitted by law. The MGCL provides that the
liability of a director or officer in a proceeding brought by or in the right of stockholders, or on behalf of stockholders may
be eliminated, except that the liability of a director or officer may not be eliminated if the officer or director received an
improper benefit or profit, or if a judgment against the director or officer is based on a finding that such person's action
or failure to act was the result of active and deliberate dishonesty and was material to the cause of action against such person.
Our Articles of Incorporation provide that
to the full extent permitted by the MGCL and other applicable law, Esquire Financial Holdings shall indemnify a director or officer
who is or was a party to any proceeding by reason of the fact that he is or was such a director or officer, and the Board of Directors
may contract in advance to indemnify any director or officer. The MGCL provides that except as limited by its articles of incorporation,
a corporation shall indemnify a director who entirely prevails in the defense of any proceeding to which he was a party because
he is or was a director of the corporation against reasonable expenses incurred in connection with the proceeding. The MGCL further
provides that a corporation may indemnify an individual made a party to a proceeding because he is or was a director against liability
incurred in the proceeding unless (i) the act or omission was material to the matter giving rise to the proceeding and was committed
in bad faith or was the result of active and deliberate dishonesty; (ii) the director actually received an improper personal benefit;
or (iii) in the case of any criminal proceeding, the director had reasonable cause to believe the act or omission was unlawful,
provided however, that if the proceeding was by or in the right of the corporation, no indemnification may be made if the director
is adjudged liable to the corporation. The Board of Directors may also indemnify an employee or agent of the corporation who was
or is a party to any proceeding by reason of the fact that he is or was an employee or agent of the corporation.
Dissenters'
Rights of Appraisal.
Under our Articles of Incorporation, stockholders
of the Company will not have dissenters' appraisal rights in connection with a plan of merger or consolidation to which the
Company is a party.
Listing and Trading
Our common stock is currently not listed
on any securities exchange. We have applied to have our common stock approved for listing on the NASDAQ Capital Market under the
symbol "ESQ."
Transfer Agent and Registrar
The transfer agent and registrar for our
common stock is American Stock Transfer & Trust Company, LLC.
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SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no
established public market for our common stock. Future sales of substantial amounts of our common stock in the public market, or
the perception that such sales may occur, could adversely affect market prices prevailing from time to time. Furthermore, because
only a limited number of shares will be available for sale shortly after this offering due to existing contractual and legal restrictions
on resale as described below, there may be sales of substantial amounts of our common stock in the public market after the restrictions
lapse. This may adversely affect the prevailing market price and our ability to raise equity capital in the future.
Upon
completion of this offering, we will have
[
·
]
shares
of common stock outstanding. Of these shares,
[
·
]
shares
of our common stock (or
[
·
]
shares
if the underwriter exercises its purchase option in full) sold in this offering will be freely transferable without restriction
or further registration under the Securities Act, except for any shares purchased by our "affiliates," as that term
is defined in Rule 144 under the Securities Act. The remaining
[
·
]
shares of our common stock (or
[
·
]
shares if the underwriter exercises its purchase option in full) outstanding
are "restricted shares" as defined in Rule 144. Restricted shares may be sold in the public market only if registered
under the Securities Act or if they qualify for an exemption from registration under Rule 144. As a result of the contractual 180-day
lock-up period described below,
[
·
]
of these shares will be available for sale in the public market only after 180 days from the date of this prospectus (generally
subject to volume and other offering limitations).
Rule 144
In general, a person who has beneficially
owned restricted shares of our common stock for at least six months would be entitled to sell such securities, provided that (i)
such person is not deemed to have been one of our affiliates at the time of, or at any time during the 90 days preceding, the sale
and (ii) we are subject to the Exchange Act periodic reporting requirements for at least 90 days before the sale. Persons who have
beneficially owned restricted shares of our common stock for at least six months but who are our affiliates at the time of, or
any time during the 90 days preceding, the sale, would be subject to additional restrictions, by which such person would be entitled
to sell within any three-month period only a number of securities that does not exceed the greater of the following:
·
1% of the number of shares of our common stock then
outstanding, which will equal approximately
[
·
]
shares immediately after this offering (or approximately
[
·
]
shares if the underwriter exercises its purchase option in full); or
·
the average weekly trading volume of our common stock on the NASDAQ
Capital Market during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale;
provided, in each case, that we are subject to the Exchange
Act periodic reporting requirements for at least 90 days before the sale. Such sales both by affiliates and by non-affiliates must
also comply with the manner of sale and notice provisions of Rule 144 to the extent applicable.
Registration Rights
We have agreed
to provide the holder of our Series B Preferred Shares with the right to include its common or preferred shares in a registration
statement that we are otherwise filing. The "piggyback" registration rights granted to the holder of our Series B Preferred
Shares will apply at the time of this offering.
Following our initial public offering, to the extent the holder of our Series
B Preferred Shares remains a holder of our common stock or our Series B Preferred Shares, it may exercise its "piggyback"
registration rights in connection with future offerings of our common stock, other than registration statements filed on Forms S-4
or
S-8.
Registration Statement on Form S-8
In
connection with or as soon as practicable following the completion of this offering, we intend to file a registration statement
with the SEC on Form S-8 to register an aggregate of approximately
[
·
]
shares
of our common stock reserved for future issuance under our equity incentive plans, as described further under "Executive
Compensation—Incentive Compensation Plans." That registration statement will become effective upon filing and
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shares
of common stock covered by such registration statement will be eligible for sale in the public market immediately after the effective
date of such registration statement (unless held by affiliates) subject to the lock-up agreements described below.
Lock-up Agreements
We, the selling stockholders and each of
our directors and executive officers and certain other persons have agreed, subject to certain exceptions, not to offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right
or warrant for the sale of, otherwise dispose of or transfer any shares of our common stock or any securities convertible into
or exchangeable or exercisable for common stock for a period of 180 days after the date of this prospectus, without the prior written
consent of Sandler O'Neill & Partners, L.P. See "Underwriting." The underwriter does not have any present
intention or arrangement to release any shares of our common stock subject to lock-up agreements prior to the expiration of the
180-day lock-up period.
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CERTAIN MATERIAL U.S. FEDERAL INCOME
TAX CONSEQUENCES
FOR NON-U.S. HOLDERS OF COMMON STOCK
The following is a summary of certain material
United States federal income tax consequences relevant to non-U.S. holders, as defined below, of the purchase, ownership and disposition
of our common stock. The following summary is based on current provisions of the Internal Revenue Code of 1986, as amended, or
the Code, Treasury regulations and judicial and administrative authority, all of which are subject to change, possibly with retroactive
effect. This section dSoes not consider state, local, estate or foreign tax consequences, nor does it address tax consequences to
special classes of investors including, but not limited to, tax-exempt organizations, insurance companies, banks or other financial
institutions, partnerships or other entities classified as partnerships for United States federal income tax purposes, dealers
in securities, persons liable for the alternative minimum tax, traders in securities that elect to use a mark-to-market method
of accounting for their securities holdings, persons who have acquired our common stock as compensation or otherwise in connection
with the performance of services, or persons that will hold our common stock as a position in a hedging transaction, "straddle,"
"conversion transaction" or other risk reduction transaction. Tax consequences may vary depending upon the particular
status of an investor. The summary is limited to non-U.S. holders who will hold our common stock as "capital assets"
(generally, property held for investment). Investors should consult their tax advisors concerning the U.S. federal income tax consequences
in light of their own specific situation, as well as consequences arising under other federal tax laws (such as the federal estate,
gift or Medicare tax laws) and the laws of any other taxing jurisdiction.
As used herein, a "U.S. holder"
is:
·
an individual citizen or resident of the United States;
·
a corporation (or any other entity treated as a corporation) created
or organized in or under the laws of the United States, any state thereof or the District of Columbia;
·
an estate the income of which is subject to U.S. federal income taxation
regardless of its source; or
·
a trust, if it (i) is subject to the primary supervision of a
court within the United States and one or more U.S. persons have the authority to control all substantial decisions of the trust,
or (ii) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
A "non-U.S. holder" is an individual,
corporation, estate or trust that is not a U.S. holder. Special rules may apply to certain non-U.S. holders such as controlled
foreign corporations, passive foreign investment companies, expatriated entities subject to Section 7874 of the Code, and,
in certain circumstances, individuals who are U.S. expatriates. Consequently, non-U.S. holders should consult their tax advisors
to determine the U.S. federal, state, local, non-U.S. and other tax consequences that may be relevant to them in light of their
particular circumstances.
If an entity or arrangement treated as a
partnership for United States federal income tax purposes holds our common stock, the tax treatment of a partner in the partnership
will generally depend upon the status of the partner and the activities of the partnership. If you are treated as a partner in
such an entity holding our common stock, you should consult your tax advisor as to the United States federal income tax consequences
applicable to you.
Distributions
Distributions with respect to our common
stock will be treated as dividends when paid to the extent of our current or accumulated earnings and profits as determined for
United States federal income tax purposes. Except as described below, if you are a non-U.S. holder of our shares, dividends paid
to you are subject to withholding of United States federal income tax at a 30% rate or at a lower rate if you are eligible for
the benefits of an income tax treaty that provides for a lower rate. Even if you are eligible for a lower treaty rate, we and other
payors will generally be required to withhold at a 30% rate (rather than the lower treaty rate) on dividends paid to you, unless
you have furnished to us or another payor:
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·
A valid Internal Revenue Service Form W-8BEN or, in the case of a
foreign entity stockholder, an IRS Form W-8BEN-E (or an acceptable substitute form) upon which you certify, under penalties of
perjury, your status as a non-United States person and your entitlement to the lower treaty rate with respect to such payments,
or
·
In the case of payments made outside the United States to an offshore
account (generally, an account maintained by you at an office or branch of a bank or other financial institution at any location
outside the United States), a valid Internal Revenue Service Form W-8IMY or other documentary evidence establishing your entitlement
to the lower treaty rate in accordance with United States Treasury regulations.
If you are eligible for a reduced rate of
U.S. withholding tax under a tax treaty, you may obtain a refund of any amounts withheld in excess of that rate by timely filing
a refund claim with the Internal Revenue Service.
If dividends paid to you are "effectively
connected" with your conduct of a trade or business within the United States, or, if required by a tax treaty, the dividends
are attributable to a permanent establishment that you maintain in the United States, we and other payors generally are not required
to withhold tax from the dividends, provided that you have furnished to us or another payor a valid Internal Revenue Service Form
W-8ECI or an acceptable substitute form upon which you represent, under penalties of perjury, that:
·
You are a non-United States person, and
·
The dividends are effectively connected with your conduct of a trade
or business within the United States and are includible in your gross income.
"Effectively connected" dividends
are taxed at rates applicable to United States citizens, resident aliens and domestic United States corporations. If you are a
corporate non-U.S. holder, "effectively connected" dividends that you receive may, under certain circumstances, be
subject to an additional "branch profits tax" at a 30% rate or at a lower rate if you are eligible for the benefits
of an income tax treaty that provides for a lower rate.
Sale or Redemption
If you are a non-U.S. holder, you generally
will not be subject to United States federal income or withholding tax on gain realized on the sale, exchange or other disposition
of our common stock unless the gain is "effectively connected" with your conduct of a trade or business in the United
States or the gain is attributable to a permanent establishment that you maintain in the United States, if that is required by
an applicable income tax treaty as a condition to subjecting you to United States taxation on a net income basis. In certain circumstances,
redemption of our stock will be characterized as a dividend for United States income tax purposes and will be taxed under the rules
described in the preceding section.
Information Reporting and Backup Withholding
Payment of dividends, and the tax withheld
on those payments, are subject to information reporting requirements. These information reporting requirements apply regardless
of whether withholding was reduced or eliminated by an applicable income tax treaty. Under the provisions of an applicable income
tax treaty or agreement, copies of the information returns reporting such dividends and withholding may also be made available
to the tax authorities in the country in which the non-U.S. holder resides. U.S. backup withholding will generally apply on payment
of dividends to non-U.S. holders unless such non-U.S. holders furnish to the payor a Form W-8BEN or, in the case of a foreign entity
stockholder, Form W-8BEN-E (or other applicable form), or otherwise establish an exemption and the payor does not have actual knowledge
or reason to know that the holder is a U.S. person, as defined under the Code, that is not an exempt recipient.
Payment of the proceeds of a sale of our
common stock within the United States or conducted through certain U.S.-related financial intermediaries is subject to information
reporting and, depending on the circumstances, backup withholding, unless the non-U.S. holder, or beneficial owner thereof, as
applicable, certifies that it is a non-U.S. holder
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on Form W-8BEN or, in the case of a foreign entity stockholder, Form W-8BEN-E
(or other applicable form), or otherwise establishes an exemption and the payor does not have actual knowledge or reason to know
the holder is a U.S. person, as defined under the Code, that is not an exempt recipient.
Currently, the back-up withholding tax rate
is 28%. Any amount withheld under the backup withholding rules from a payment to a non-U.S. holder is allowable as a credit against
the non-U.S. holder's United States federal income tax, which may entitle the non-U.S. holder to a refund, provided that
the non-U.S. holder timely provides the required information to the Internal Revenue Service. Moreover, certain penalties may be
imposed by the Internal Revenue Service on a non-U.S. holder who is required to furnish information but does not do so in the proper
manner. Non-U.S. holders should consult with their tax advisors regarding the application of backup withholding in their particular
circumstances and the availability of and procedure for obtaining an exemption from backup withholding under current Treasury regulations.
Recent Legislation Relating to Foreign Accounts
Under Sections 1471 through 1474 of the
Code and the Treasury regulations and administrative guidance promulgated thereunder (collectively, FATCA), a 30% withholding tax
may be imposed on distributions of dividends and payments of gross proceeds from the sale or other disposition of our common stock
made to a "foreign financial institution" or a "non-financial foreign entity" (in each case, as defined in
the Code), regardless of whether such foreign institution or entity is a beneficial owner or an intermediary. To avoid such withholding,
in the case of a foreign financial institution, the foreign financial institution must undertake certain diligence and reporting
obligations and, in the case of a non-financial foreign entity, the non-financial foreign entity must either certify it does not
have any "substantial United States owners" (as defined in the Code) or furnish identifying information regarding each
substantial United States owner and satisfy certain other requirements, unless the foreign financial institution or non-financial
foreign entity otherwise qualifies for an exemption from these rules.
If the payee is a foreign financial institution
and is subject to the diligence and reporting requirements described above, it must enter into an agreement with the U.S. Department
of the Treasury requiring, among other things, that it undertake to identify accounts held by certain "U.S. persons"
or "U.S.-owned foreign entities" (in each case, as defined in the Code), annually report certain information about such
accounts and withhold 30% on certain payments to non-compliant foreign financial institutions and certain other account holders.
A foreign financial institution generally certifies compliance with these requirements on a valid Internal Revenue Service Form
W-8BEN-E. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States
governing FATCA may be subject to different rules.
If the payee is a non-financial foreign
entity, it generally provides the required certification on a valid Internal Revenue Service Form W-8BEN-E. Foreign entities located
in jurisdictions that have an intergovernmental agreement with the United States governing these withholding and reporting requirements
may be subject to different rules.
These withholding taxes would be imposed
on dividends paid with respect to our common stock to foreign financial institutions or non-financial entities (including in their
capacity as agents or custodians for beneficial owners of our common stock) that fail to satisfy the above requirements. However,
under the applicable Treasury Regulations and IRS guidance, withholding under FATCA generally will not apply to payments of gross
proceeds from the sale or other disposition of our common stock before January 1, 2019. Under certain circumstances, a non-U.S.
holder might be eligible for refunds or credits of such taxes.
Prospective non-U.S. holders should consult
with their tax advisors regarding the possible implications of FATCA on their investment in our common stock.
Non-U.S. Holders are encouraged to consult
with their tax advisors regarding the possible implications of the legislation on their investment in our common stock.
119
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UNDERWRITING
We, the selling stockholders and the underwriter
named below will enter into an underwriting agreement with respect to the shares of common stock being offered hereby. Subject
to the terms and conditions contained in the underwriting agreement, the underwriter has agreed to purchase, and we and the selling
shareholders, collectively, have agreed to sell, the number of shares of our common stock set forth in the table below.
Name
Number of Shares
Sandler O'Neill & Partners, L.P.
Total
The underwriter is committed to purchase
and pay for all such shares of common stock if any are purchased.
We have granted to the underwriter an option,
exercisable no later than 30 days after the date of this prospectus, to purchase up to [●] additional shares of common
stock at the public offering price less the underwriting discount set forth on the cover page of this prospectus. The underwriter
may exercise this option only to cover over-allotments, if any, made in connection with this offering. To the extent the option
is exercised and the conditions of the underwriting agreement are satisfied, we will be obligated to sell to the underwriter, and
the underwriter will be obligated to purchase, these additional shares of common stock.
The
underwriter proposes to offer the shares of common stock directly to the public at the offering price set forth on the cover page
of this prospectus and to certain securities dealers at the public offering price less a concession not in excess of $[
·
]
per share. The underwriter may allow, and these dealers may re-allow, a concession not in excess of $[
·
]
per share on sales to other dealers. After the public offering of the common stock, the underwriter may change the offering price
and other selling terms.
The following table shows the per share
and total underwriting discount that we will pay to the underwriter and the proceeds we will receive and the selling stockholders
will receive before expenses. These amounts are shown assuming both no exercise and full exercise of the underwriter's over-allotment
option to purchase additional shares.
Per Share
Total
Without
Over-Allotment
Total
With
Over-Allotment
Price to public
Underwriting discount
Proceeds to us, before expenses
Proceeds to selling stockholders, before expenses
We
estimate that the total expenses of the offering, excluding the underwriting discount, will be approximately $[
·
]
million and are payable by us. We have agreed to reimburse the underwriter for their actual out-of-pocket expenses incurred in
connection with the offering, including, without limitation, legal fees and expenses, marketing, syndication and travel expenses.
The shares of common stock are being offered
by the underwriter, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of certain legal
matters by counsel for the underwriter and other conditions specified in the underwriting agreement. The underwriter reserves the
right to withdraw, cancel or modify this offer and to reject orders in whole or in part.
The underwriting agreement provides that
the obligations of the underwriter is conditional and may be terminated at its discretion based on its assessment of the state
of the financial markets. The obligations of the underwriter may also be terminated upon the occurrence of the events specified
in the underwriting agreement. The underwriting agreement provides that the underwriter is obligated to purchase all the shares
of common stock in this offering if any are purchased, other than those shares covered by the over-allotment option described above.
120
Table of Contents
Lock-up Agreements
.
We,
each of our executive officers and directors, the selling stockholders and certain other persons, have agreed, subject to certain
exceptions for a period of 180 days after the date of this prospectus, not to sell, offer, agree to sell, contract to sell,
hypothecate, pledge, grant any option to sell, make any short sale, or otherwise dispose of or hedge, directly or indirectly, any
shares of our common stock or securities convertible into, exchangeable or exercisable for any shares of our common stock or warrants
or other rights to purchase shares of our common stock or other similar securities without, in each case, the prior written consent
of Sandler O'Neill & Partners, L.P. These restrictions are expressly agreed to preclude us, and our executive officers
and directors and certain other persons, from engaging in any hedging or other transaction or arrangement that is designed to,
or which reasonably could be expected to, lead to or result in a sale, disposition or transfer, in whole or in part, of any of
the economic consequences of ownership of our common stock, whether such transaction would be settled by delivery of common stock
or other securities, in cash or otherwise.
Indemnity
. We have agreed
to indemnify the underwriter, and persons who control the underwriter, against certain liabilities, including liabilities under
the Securities Act, and to contribute to payments that the underwriter may be required to make in respect of these liabilities.
Stabilization
. In connection
with this offering, the underwriter may engage in stabilizing transactions, over-allotment transactions, syndicate covering transactions
and penalty bids.
·
Stabilizing transactions permit bids to purchase shares of common
stock so long as the stabilizing bids do not exceed a specified maximum, and are engaged in for the purpose of preventing or retarding
a decline in the market price of the common stock while the offering is in progress.
·
Over-allotment transactions involve sales by the underwriter of shares
of common stock in excess of the number of shares the underwriter is obligated to purchase. This creates a syndicate short position
which may be either a covered short position or a naked short position. In a covered short position, the number of shares of common
stock over-allotted by the underwriter is not greater than the number of shares that they may purchase in the over-allotment option.
In a naked short position, the number of shares involved is greater than the number of shares in the over-allotment option. The
underwriter may close out any short position by exercising their over-allotment option and/or purchasing shares in the open market.
·
Syndicate covering transactions involve purchases of common stock
in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source
of shares to close out the short position, the underwriter will consider, among other things, the price of shares available for
purchase in the open market as compared with the price at which they may purchase shares through exercise of the over-allotment
option. If the underwriter sells more shares than could be covered by exercise of the over-allotment option and, therefore, have
a naked short position, the position can be closed out only by buying shares in the open market. A naked short position is more
likely to be created if the underwriter is concerned that after pricing there could be downward pressure on the price of the shares
in the open market that could adversely affect investors who purchase in the offering.
·
Penalty bids permit the representative to reclaim a selling concession
from a syndicate member when the common stock originally sold by that syndicate member is purchased in stabilizing or syndicate
covering transactions to cover syndicate short positions.
These stabilizing transactions, syndicate
covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common stock or preventing
or retarding a decline in the market price of our common stock. As a result, the price of our common stock in the open market may
be higher than it would otherwise be in the absence of these transactions. Neither we nor the underwriter makes any representation
or prediction as to the effect that the transactions described above may have on the price of our common stock. These transactions
may be effected on the Nasdaq Capital Market, in the over-the-counter market or otherwise and, if commenced, may be discontinued
at any time.
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NASDAQ Capital Market Listing
.
We expect the shares to be approved for listing on the NASDAQ Capital Market, subject to notice of issuance, under the symbol "ESQ."
Offering Price Determination
.
Before this offering, there has been no public market for our common stock. The initial public offering price will be determined
through negotiations between us, the selling stockholders and the underwriter. In addition to prevailing market conditions, the
factors to be considered in determining the initial public offering price are:
·
the valuation multiples of publicly traded companies that the underwriter
believes to be comparable to us;
·
our financial information;
·
the history of, and the prospects for, our company and the industry
in which we compete;
·
an assessment of our management, its past and present operations,
and the prospects for, and timing of, our future revenues;
·
our book value; and
·
the above factors in relation to market values and various valuation
measures of other companies engaged in activities similar to ours.
An active trading market for the shares
may not develop. It is also possible that after the offering the shares will not trade in the public market at or above the initial
public offering price.
From time to time, the underwriter and its
affiliates have provided, and may continue to provide, investment banking services to us in the ordinary course of its businesses,
and may receive compensation for such services. The underwriter and its affiliates may also make investment recommendations and/or
publish or express independent research views in respect of those securities or instruments and may at any time hold, or recommend
to clients that they acquire, long and/or short positions in those securities and instruments.
Electronic Distribution
. A
prospectus in electronic format may be made available by e-mail or on the websites or through online services maintained by the
underwriter or its affiliates. In those cases, prospective investors may view offering terms online and may be allowed to place
orders online. The underwriter may agree with us to allocate a specific number of shares for sale to online brokerage account holders.
Any such allocation for online distributions will be made by the underwriter on the same basis as other allocations. Other than
the prospectus in electronic format, the information on the underwriter's website and any information contained on any other
website maintained by the underwriter is not part of this prospectus, has not been approved and/or endorsed by the underwriter
or us and should not be relied upon by investors.
Selling Restrictions
.
Other than in the United States, no action has been taken by us or the underwriter that would permit a public offering of the securities
offered by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus
may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in
connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances
that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this
prospectus comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution
of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered
by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.
122
Table of Contents
LEGAL MATTERS
The validity of the shares of common stock
being offered by this prospectus will be passed upon for us by Luse Gorman, PC, Washington, DC. Certain legal matters will be passed
upon for the underwriter by Manatt, Phelps & Phillips LLP, San Francisco, California.
EXPERTS
The consolidated financial statements of
Esquire Financial Holdings, Inc. and subsidiaries as of December 31, 2016 and 2015 and for each of the two years in the period
ended December 31, 2016, included in this prospectus, have been so included in reliance on the report of Crowe Horwath LLP, independent
registered public accounting firm, upon the authority of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
Esquire Financial Holdings, Inc. has filed
with the Securities and Exchange Commission a registration statement under the Securities Act of 1933 with respect to the shares
of common stock offered hereby. As permitted by the rules and regulations of the Securities and Exchange Commission, this prospectus
does not contain all the information set forth in the registration statement. Such information, including the appraisal report
which is an exhibit to the registration statement, can be examined without charge at the public reference facilities of the Securities
and Exchange Commission located at 100 F Street, N.E., Washington, D.C. 20549, and copies of such material can be obtained from
the Securities and Exchange Commission at prescribed rates. The Securities and Exchange Commission's telephone number is
1-800-SEC-0330. In addition, the Securities and Exchange Commission maintains a web site (http://www.sec.gov) that contains reports,
proxy and information statements and other information regarding registrants that file electronically with the Securities and Exchange
Commission, including Esquire Financial Holdings, Inc. The statements contained in this prospectus as to the contents of any contract
or other document filed as an exhibit to the registration statement are, of necessity, brief descriptions of the material terms
of, and should be read in conjunction with, such contract or document.
123
Table of Contents
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Interim Condensed
    Consolidated Financial Statements
Condensed
Consolidated Financial Statements
Condensed Consolidated Statements of Financial Condition
F-2
Condensed Consolidated Statements of Income
F-3
Condensed Consolidated Statements of Comprehensive Income
F-4
Condensed Consolidated Statements of Changes in Stockholders' Equity
F-5
Condensed Consolidated Statements of Cash Flows
F-6
Notes to Interim Condensed Consolidated Financial Statements
F-8
2016 and 2015 Consolidated Annual Financial Statements
Independent Auditor's Report
F-22
Consolidated Financial Statements
Consolidated Statements of Financial Condition
F-23
Consolidated Statements of Income
F-24
Consolidated Statements of Comprehensive Income
F-25
Consolidated Statements of Changes in Stockholders' Equity
F-26
Consolidated Statements of Cash Flows
F-27
Notes to Consolidated Financial Statements
F-29
F-
1
Table of Contents
ESQUIRE
FINANCIAL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF FINANCIAL CONDITION
(Dollars in thousands, except per
share data)
March 31,
December 31,
2017
2016
(Unaudited)
(Audited)
ASSETS
Cash and due from banks
$
512
$
437
Interest earning deposits
32,074
42,556
Total cash and cash equivalents
32,586
42,993
Securities available-for-sale, at fair value
103,652
92,645
Securities, restricted, at cost
1,746
1,649
Loans
290,556
278,578
Less: allowance for loan losses
(3,523
)
(3,413
)
Loans, net
287,033
275,165
Premises and equipment, net
2,737
2,767
Accrued interest receivable
1,635
1,541
Deferred tax asset
2,582
3,108
Other assets
6,088
4,965
Total assets
$
438,059
$
424,833
LIABILITIES AND StocKHOLDERS' EQUITY
Deposits:
Demand
$
133,473
$
124,990
Savings, NOW and money market
227,212
221,843
Time
22,687
23,955
Total deposits
383,372
370,788
Secured borrowings
284
371
Accrued expenses and other liabilities
1,159
1,488
Total Liabilities
384,815
372,647
Commitments and Contingencies
-
-
Stockholders' equity:
Preferred Stock, par value $0.01; authorized 2,000,000
    shares; issued and outstanding (non-voting) 66,985 at March 31, 2017 and 66,985 December 31 2016
1
1
Common stock, par value $0.01; authorized 15,000,000
    shares; issued and outstanding 5,003,030 shares at March 31, 2017, and 5,002,950 shares at December 31, 2016
50
50
Additional paid-in capital
58,983
58,845
Retained deficit
(5,011
)
(5,826
)
Accumulated other comprehensive
    loss
(779
)
(884
)
Total stockholders'
    equity
53,244
52,186
Total
    liabilities and stockholders' equity
$
438,059
$
424,833
See accompanying condensed notes
to interim condensed consolidated financial statements.
F-
2
Table of Contents
ESQUIRE
FINANCIAL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF INCOME
(Dollars in thousands, except per
share data)
(Unaudited)
For the Three Months
    Ended
March 31,
2017
2016
Interest income:
Loans
$
3,827
$
3,225
Securities, available for sale
528
473
Interest earning deposits and other
77
35
Total interest income
4,432
3,733
Interest expense:
Savings, NOW and money market deposits
109
90
Time deposits
22
5
Borrowings
6
6
Total interest expense
137
101
Net interest income
4,295
3,632
Provision for loan losses
150
145
Net interest income after provision for loan losses
4,145
3,487
Non-interest income:
Customer related fees and service charges
366
228
Merchant processing income
838
753
Net gains on sales of available-for-sale securities
-
6
Total non-interest income
1,204
987
Non-interest expense:
Employee compensation and benefits
2,345
1,962
Occupancy and equipment, net
387
282
Professional and consulting services
389
413
FDIC assessment
42
50
Advertising and marketing
110
143
Travel and business relations
106
74
OCC assessments
29
26
Data processing
370
339
Other operating expenses
246
131
Total non-interest expense
4,024
3,420
Net income before income taxes
1,325
1,054
Income tax expense
510
411
Net income
$
815
$
643
Earnings per common share
Basic
$
0.16
$
0.13
Diluted
$
0.16
$
0.13
See accompanying condensed notes
to interim condensed consolidated financial statements.
F-
3
Table of Contents
ESQUIRE
FINANCIAL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME
(Dollars in thousands)
(Unaudited)
For the Three Months
    Ended
March 31,
2017
2016
Net income
$
815
$
643
Other comprehensive income:
Unrealized holding gains arising during the period
    on securities available for sale
183
1,683
Reclassification adjustment for net gains included
    in net income
-
(6
)
Tax effect
(78
)
(662
)
Total other comprehensive
    income
105
1,027
Total comprehensive income
$
920
$
1,670
See accompanying condensed notes
to interim condensed consolidated financial statements.
F-
4
Table of Contents
ESQUIRE
FINANCIAL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF CHANGES IN STOCKHOLDERS' EQUITY
(Dollars in thousands)
(Unaudited)
Accumulated
Additional
other
Total
Preferred
Common
Preferred
Common
paid in
Retained
comprehensive
stockholders'
shares
shares
stock
stock
capital
deficit
income
    (loss)
equity
Balance at January
    1, 2016
157,985
4,911,870
$
2
$
49
$
58,456
$
(8,648
)
$
(434
)
$
49,425
Net income
-
-
-
-
-
643
-
643
Other comprehensive income
-
-
-
-
-
-
1,027
1,027
Stock options expense
-
-
-
-
75
-
-
75
Balance
    at March 31, 2016
157,985
4,911,870
$
2
$
49
$
58,531
$
(8,005
)
$
593
$
51,170
Balance at January 1, 2017
66,985
5,002,950
$
1
$
50
$
58,845
$
(5,826
)
$
(884
)
$
52,186
Net income
-
-
-
-
-
815
-
815
Other comprehensive income
-
-
-
-
-
-
105
105
Issuance of common stock
-
80
-
-
1
-
-
1
Stock options expense
-
-
-
-
137
-
-
137
Balance
    at March 31, 2017
66,985
5,003,030
$
1
$
50
$
58,983
$
(5,011
)
$
(779
)
$
53,244
See accompanying condensed notes
to interim condensed consolidated financial statements.
F-
5
Table of Contents
ESQUIRE
FINANCIAL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
For the Three Months
    Ended
March 31,
2017
2016
Cash flows from operating activities:
Net income
$
815
$
643
Adjustments to reconcile net income to net cash
    used in operating activities:
Provision for loan losses
150
145
Net security gains on available-for-sale securities
-
(6
)
Depreciation
102
42
Stock options expense
137
75
Net amortization:
Securities
102
60
Loans
179
145
Changes in other assets and liabilities:
Accrued interest receivable
(94
)
(140
)
Deferred tax asset
448
411
Other assets
(1,123
)
(647
)
Accrued expenses and other liabilities
(329
)
100
Net cash provided by operating activities
387
828
Cash flows from investing activities:
Originations and purchases of loans, net of
    principal repayments
(12,197
)
(11,864
)
Purchases of securities available for sale
(15,379
)
-
Proceeds of sales of securities available for sale
-
4,068
Principal repayments on securities available for sale
4,453
2,606
Purchases of securities, restricted
(97
)
(57
)
Purchases of premises and equipment
(72
)
(670
)
Net cash used in investing activities
(23,292
)
(5,917
)
Cash flows from financing activities:
Net Increase (decrease) in deposits
12,584
(2,993
)
Decrease in secured borrowings
(87
)
(3
)
Proceeds from issuance of common stock
1
-
Net cash provided by (used in) financing activities
12,498
(2,996
)
Net decrease in cash and cash equivalents
(10,407
)
(8,085
)
Cash and cash equivalents at beginning of the period
42,993
33,154
Cash and cash equivalents at end of the period
$
32,586
$
25,069
(Continued)
F-
6
Table of Contents
ESQUIRE
FINANCIAL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
For the Three Months
    Ended
March 31,
2017
2016
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest
$
136
$
101
Income taxes
10
29
See accompanying condensed notes
to interim condensed consolidated financial statements.
F-
7
Table of Contents
ESQUIRE
FINANCIAL HOLDINGS, INC
.
NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Dollars in thousands, except per
share data)
(Unaudited)
NOTE 1 — Basis
of Presentation
The interim
condensed consolidated financial statements include the accounts of Esquire Financial Holdings, Inc. and its wholly owned
subsidiary, Esquire Bank, N.A. These entities are collectively referred to as "the Company." All significant
intercompany accounts and transactions have been eliminated in consolidation.
The accompanying
unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting
principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial information. In the opinion of management, the interim statements
reflect all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows of the
Company on a consolidated basis and all such adjustments are recurring in nature. These financial statements and the accompanying
notes should be read in conjunction with the Company's audited financial statements for the years ended December 31, 2016
and 2015. Operating results for the three months ended March 31, 2017 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2017 or any other period.
Subsequent Events
The Bank has evaluated
subsequent events for recognition and disclosure through the date of issuance.
Secured Borrowing
The Company had
a secured borrowing of $284 and $371 as of March 31, 2017 and December 31, 2016, respectively, relating to certain loan participations
sold by the Company that did not qualify for sales treatment.
Preferred Stock
The Series B 0.00%
Non-Voting preferred stock does not have a maturity date and is not convertible by the holder, but is convertible on a one for
one basis into shares of common stock by us under certain circumstances. In addition, the preferred stock does not have a liquidation
preference. Preferred shares have equal rights to receive dividends when dividends are declared on common stock, and thus are
considered participating securities.
Loss Contingencies
Loss contingencies,
including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood
of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there are now such
matters that will have a material effect on the consolidated financial statements.
New Accounting Pronouncements
Accounting Standards
Update (ASU) 2014-09, "Revenue from Contracts with Customers (Topic 606)" implements a common revenue standard that
clarifies the principles for recognizing revenue. The core principle of ASU 2014-09 is that an entity should recognize revenue
to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following
steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine
the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue
when (or as) the entity satisfies a performance obligation. In August 2016, the (Financial Accounting Standards Board FASB) deferred
the effective date of the ASU by one year which means ASU 2014-09 will be effective for the Company on January 1, 2018. The Company
is currently evaluating the potential impact of ASU 2014-09 on its consolidated financial statements.
On January 5,
2016, the FASB issued ASU 2016-01, "Financial Instruments–Overall: Recognition and Measurement of Financial Assets
and Financial Liabilities" (the ASU). Under this ASU, the current GAAP model is changed in the areas of accounting
for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for
financial instruments. In addition, the FASB clarified guidance related to the valuation allowance assessment when recognizing
deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The ASU will be effective for
public business entities in beginning after December 15, 2017, including interim periods within those fiscal years. Adoption of
this standard is not expected to have a material effect on the Company's operating results or financial condition.
(Continued)
F-
8
Table of Contents
ESQUIRE FINANCIAL HOLDINGS, INC
.
NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Dollars in thousands, except per
share data)
(Unaudited)
NOTE 1 — Basis
of Presentation (Continued)
On February 25,
2016, the FASB completed its Leases project by issuing ASU No. 2017-02, "Leases (Topic 842)." The new guidance affects
any organization that enters into a lease, or sublease, with some specified exemptions. Under the new guidance, a lessee will
be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP,
the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend
on its classification as a finance or operating lease. However, unlike current GAAP, which requires only capital leases to be
recognized on the balance sheet, the new ASU will require both types of leases to be recognized on the balance sheet. The
ASU will also require expanded disclosures and will take effect for fiscal years beginning after December 15, 2018, and for interim
periods within fiscal years. The Company is currently evaluating the impact of the ASU on its financial condition and results
of operations.
In March 2016,
the FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic 718): "Improvements to Employee Share-Based Payment
Accounting." This update includes multiple provisions intended to simplify various aspects of the accounting for share-based
payments. For public companies, the amendments in this update are effective for annual periods beginning after December 15, 2016,
and interim periods within those annual periods. Adoption of this standard in the first quarter of 2017 did not have a material
effect on the Company's operating results or financial condition.
On June 16, 2016,
the FASB issued Accounting Standards Update No. 2016-13, "Financial Instruments – Credit Losses (Topic 326): Measurement
of Credit Losses on Financial Instruments" (the ASU). This ASU replaces the incurred loss model with an expected loss
model, referred to as "current expected credit loss" (CECL) model. It will significantly change estimates for
credit losses related to financial assets measured at amortized cost, including loans receivable, held-to-maturity (HTM) debt
securities and certain other contracts. This ASU will be effective for the Company in fiscal years beginning after December 15,
2019, including interim periods within those fiscal years. The Company is currently in the process of evaluating the impact of
this ASU on its financial position, results of operations and cash flows.
NOTE
2 — Securities
Available-for-Sale Securities
The amortized
cost, gross unrealized gains and losses and estimated fair value of securities available for sale were as follows:
Gross
Gross
Amortized
Unrealized
Unrealized
Fair
Cost
Gains
Losses
Value
March 31, 2017
Mortgage-backed securities - agency
$
15,842
$
14
$
(439
)
$
15,417
Collateralized mortgage obligations
    (CMO's) – agency
89,076
40
(881
)
88,235
Total available-for-sale
$
104,918
$
54
$
(1,320
)
$
103,652
December 31, 2016
Mortgage-backed securities - agency
$
16,417
$
12
$
(417
)
$
16,012
Collateralized mortgage obligations
    (CMO's) – agency
77,677
56
(1,100
)
76,633
Total available-for-sale
$
94,094
$
68
$
(1,517
)
$
92,645
(Continued)
F-
9
Table of Contents
ESQUIRE FINANCIAL HOLDINGS, INC
.
NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Dollars in thousands, except per
share data)
(Unaudited)
NOTE
2 — Securities
(Continued)
The amortized
cost and fair value of debt securities are shown by contractual maturity. Expected maturities may differ from contractual maturities
if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at
a single maturity date are shown separately. We have no securities due at a single maturity.
March
    31, 2017
Amortized
Fair
Cost
Value
Mortgage-backed securities - agency
$
15,842
$
15,417
CMO's – agency
89,076
88,235
Total
$
104,918
$
103,652
Mortgage-backed
securities include residential pass-through certificates guaranteed by FHLMC, FNMA, or GNMA and the CMO's are backed by
government agency pass-through certificates. The 2017 and 2016 pass-through certificates are fixed rate instruments. CMO's,
by virtue of the underlying residential collateral or structure, are fixed rate current pay sequentials or planned amortization
classes (PAC's).
When purchasing
investment securities, the Company's overall interest-rate risk profile is considered as well as the adequacy of expected
returns relative to risks assumed, including prepayments. In continuously managing the investment securities portfolio, management
occasionally sells investment securities in response to, or in anticipation of, changes in interest rates and spreads, actual
or anticipated prepayments, liquidity needs and credit risk associated with a particular security.
The proceeds from
sales and calls of securities and the associated gains and losses are listed below for the three months ended March 31,:
2017
2016
Proceeds
$
-
$
4,068
Gross gains
-
6
Gross losses
-
-
The tax provision
related to the realized gain was $2, for the three months ended 2016.
At March 31, 2017,
securities having a fair value of $88,235 were pledged to the Federal Home Loan Bank of New York (FHLB) for borrowing capacity
totaling $78,796. At December 31, 2016, securities having a fair value of approximately $76,633 were pledged to the FHLB for borrowing
capacity totaling $72,837. At March 31, 2017 and December31, 2016, the Company had no outstanding FHLB advances.
At March 31, 2017,
securities having a fair value of $15,417 were pledged to the Federal Reserve Bank of New York (FRB) for borrowing capacity
totaling $15,126. At December 31, 2016, securities having a fair value of approximately $16,012 were pledged to the FRB for borrowing
capacity totaling $15,580. At March 31, 2017 and December 31, 2016, the Company had no outstanding FRB borrowings.
At March 31, 2017
and December 31, 2016, the Company, also had lines of credits of $3,500 and $4,000 with Atlantic Community Bankers' Bank and Zions
Bank, respectively. No amounts were drawn, nor were there securities pledged against these lines at March 31, 2017 and December
31, 2016.
(Continued)
F-
10
Table of Contents
ESQUIRE FINANCIAL HOLDINGS, INC
.
NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Dollars in thousands, except per
share data)
(Unaudited)
NOTE
2 — Securities
(Continued)
The following
table provides the gross unrealized losses and fair value, aggregated by investment category and length of time the individual
securities have been in a continuous unrealized loss position as of:
Less
    Than 12 Months
12 Months
    or Longer
Total
Gross
Gross
Gross
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
Value
Losses
Value
Losses
Value
Losses
March 31, 2017
Mortgage-backed securities – agency
$
13,447
(439
)
$
-
$
-
$
13,447
$
(439
)
CMO's - Agency
60,572
(657
)
5,646
(224
)
66,218
(881
)
Total temporarily impaired
    securities
$
74,019
$
(1,096
)
$
5,646
$
(224
)
$
79,665
$
(1,320
)
December 31, 2016
Mortgage-backed securities – agency
$
13,936
$
(417
)
$
-
$
-
$
13,936
$
(417
)
CMO's - agency
50,269
(859
)
5,973
(241
)
56,242
(1,100
)
Total temporarily impaired
    securities
$
64,205
$
(1,276
)
$
5,973
$
(241
)
$
70,178
$
(1,517
)
Management reviews
the investment portfolio on a quarterly basis to determine the cause, magnitude and duration of declines in the fair value of
each security. In estimating other-than-temporary impairment (OTTI), management considers many factors including: (1) the
length of time and extent that fair value has been less than cost, (2) the financial condition and near term prospects of
the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Company has
the intent to sell the security or more likely than not will be required to sell the security before its anticipated recovery.
If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair
value is recognized as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount
of impairment is split into two components as follows: (1) OTTI related to credit loss, which must be recognized in the income
statement and (2) OTTI related to other factors, which is recognized in other comprehensive income. The credit loss is defined
as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. The assessment
of whether any other than temporary decline exists may involve a high degree of subjectivity and judgment and is based on the
information available to management at a point in time. Management evaluates securities for OTTI at least on a quarterly basis,
and more frequently when economic or market conditions warrant such an evaluation.
At March 31, 2017,
securities in unrealized loss positions were issuances from government sponsored entities. Due to the decline in fair value attributable
to changes in interest rates, not credit quality and because the Company does not have the intent to sell the securities and it
is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider
the securities to be other-than-temporarily impaired at March 31, 2017.
No impairment
charges were recorded for the three months ended March 31, 2017 and 2016.
(Continued)
F-
11
Table of Contents
ESQUIRE FINANCIAL HOLDINGS, INC
.
NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Dollars in thousands, except per
share data)
(Unaudited)
NOTE 3 — Loans
The composition
of loans by class is summarized as follows:
% of
% of
March
    31, 2017
Total
December
    31, 2016
Total
1-4 family residential
$
47,556
16
%
$
49,597
18
%
Commercial
112,818
39
106,064
38
Multifamily
92,755
32
83,410
30
Commercial real estate
21,277
7
22,198
8
Construction
4,054
2
5,610
2
Consumer
11,037
4
10,571
4
Total loans
289,497
100
%
277,450
100
%
Deferred costs and unearned premiums, net
1,059
1,128
Allowance for loan losses
(3,523
)
(3,413
)
Net loans
$
287,033
$
275,165
The following
tables present the activity in the allowance for loan losses by class for the three months ending March 31, 2017 and 2016:
1-4 Family
Commercial
Residential
Commercial
Multifamily
Real
    Estate
Construction
Consumer
Total
March 31, 2017
Allowance for loan losses:
Beginning balance
$
360
$
1,934
$
621
$
238
$
141
$
119
$
3,413
Provision (credit) for loan losses
(10
)
105
48
(11
)
(39
)
57
150
Recoveries
-
-
-
-
-
-
-
Loans charged-off
-
-
-
-
-
(40
)
(40
)
Total ending allowance balance
$
350
$
2,039
$
669
$
227
$
102
$
136
$
3,523
March 31, 2016
Allowance for loan losses:
Beginning balance
$
213
$
1,536
$
533
$
230
$
134
$
153
$
2,799
Provision for loan losses
8
61
21
1
6
48
145
Recoveries
-
25
-
-
-
-
25
Loans charged-off
-
-
-
-
-
-
-
Total ending allowance balance
$
221
$
1,622
$
554
$
231
$
140
$
201
$
2,969
(Continued)
F-
12
Table of Contents
ESQUIRE FINANCIAL HOLDINGS, INC
.
NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Dollars in thousands, except per
share data)
(Unaudited)
NOTE 3 — Loans
(Continued)
The following
tables present the balance in the allowance for loan losses and the recorded investment in loans by class and based on impairment
method as of March 31, 2017 and December 31, 2016:
1-4 Family
Commercial
Residential
Commercial
Multifamily
Real
    Estate
Construction
Consumer
Total
March 31, 2017
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Collectively evaluated
    for impairment
350
2,039
669
227
102
136
3,523
Total ending allowance balance
$
350
$
2,039
$
669
$
227
$
102
$
136
$
3,523
Loans:
Loans individually evaluated for impairment
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Loans collectively evaluated
    for impairment
47,556
112,818
92,755
21,277
4,054
11,037
289,497
Total ending loans balance
$
47,556
$
112,818
$
92,755
$
21,277
$
4,054
$
11,037
$
289,497
Recorded investment
is not adjusted for accrued interest and deferred costs due to immateriality.
(Continued)
F-
13
Table of Contents
ESQUIRE FINANCIAL HOLDINGS, INC
.
NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Dollars in thousands, except per
share data)
(Unaudited)
NOTE 3 — Loans
(Continued
)
1-4 Family
Commercial
Residential
Commercial
Multifamily
Real
    Estate
Construction
Consumer
Total
December 31, 2016
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Collectively evaluated
    for impairment
360
1,934
621
238
141
119
3,413
Total ending allowance balance
$
360
$
1,934
$
621
$
238
$
141
$
119
$
3,413
Loans:
Loans individually evaluated for impairment
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Loans collectively evaluated
    for impairment
49,597
106,064
83,410
22,198
5,610
10,571
277,450
Total ending loans balance
$
49,597
$
106,064
$
83,410
$
22,198
$
5,610
$
10,571
$
277,450
Non-Performing Loans
Non-performing
loans include loans 90 days past due and still accruing and non-accrual loans. At March 31, 2017 and December 31, 2016, none of
the Company's loans met these conditions.
The following
tables present the aging of the recorded investment in past due loans by class of loans as of March 31, 2017 and December 31,
2016:
30 - 59
60 - 89
Greater than
Days
Days
90 Days
Total
Loans Not
Past
    Due
Past
    Due
Past
    Due
Past
    Due
Past
    Due
Total
March 31, 2017
1-4 family residential
$
-
$
-
$
-
$
-
$
47,556
$
47,556
Commercial
284
-
-
284
112,534
112,818
Multifamily
-
-
-
-
92,755
92,755
Commercial real estate
-
-
-
-
21,277
21,277
Construction
-
-
-
-
4,054
4,054
Consumer
-
-
-
-
11,037
11,037
Total
$
284
$
-
$
-
$
284
$
289,213
$
289,497
(Continued)
F-
14
Table of Contents
ESQUIRE FINANCIAL HOLDINGS, INC
.
NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Dollars in thousands, except per
share data)
(Unaudited)
NOTE 3 — Loans
(Continued)
30 - 59
60 - 89
Greater than
Days
Days
90 Days
Total
Loans Not
Past
    Due
Past
    Due
Past
    Due
Past
    Due
Past
    Due
Total
December 31, 2016
1-4 family residential
$
203
$
-
$
-
$
203
$
49,394
$
49,597
Commercial
-
-
-
-
106,064
106,064
Multifamily
-
-
-
-
83,410
83,410
Commercial real estate
-
-
-
-
22,198
22,198
Construction
-
-
-
-
5,610
5,610
Consumer
-
-
-
-
10,571
10,571
Total
$
203
$
-
$
-
$
203
$
277,247
$
277,450
Credit Quality Indicators
The Company categorizes
loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current
financial information, historical payment experience, credit documentation, public information, and current economic trends, among
other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed
whenever a credit is extended, renewed or modified, or when an observable event occurs indicating a potential decline in credit
quality, and no less than annually for large balance loans.
The Company uses
the following definitions for risk ratings:
Special
Mention
- Loans classified as special mention have a potential weakness that deserves management's close attention. If left
uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's
credit position at some future date.
Substandard
- Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or
of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation
of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies
are not corrected.
Doubtful
- Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with
the added characteristic
that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values,
highly questionable and improbable.
Loans not meeting
the criteria above that are analyzed individually as part of the above described process are considered
to be pass rated loans.
Based on the most
recent analysis performed, the risk category of loans by class of loans is as follows:
Special
Pass
Mention
Substandard
Doubtful
March 31, 2017
1-4 family residential
$
47,556
$
-
$
-
$
-
Commercial
111,889
929
-
-
Multifamily
92,755
-
-
-
Commercial real estate
21,277
-
-
-
Construction
4,054
-
-
-
Consumer
11,037
-
-
-
Total
$
288,568
$
929
$
-
$
-
(Continued)
F-
15
Table of Contents
ESQUIRE FINANCIAL HOLDINGS, INC
.
NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Dollars in thousands, except per
share data)
(Unaudited)
NOTE 3 — Loans
(Continued)
Special
Pass
Mention
Substandard
Doubtful
December 31, 2016
1-4 family residential
$
49,597
$
-
$
-
$
-
Commercial
105,777
287
-
-
Multifamily
83,410
-
-
-
Commercial real estate
22,198
-
-
-
Construction
5,610
-
-
-
Consumer
10,571
-
-
-
Total
$
277,163
$
287
$
-
$
-
The Company considers
the performance of the loan portfolio and its impact on the allowance for loan losses. For residential and consumer loan classes,
the Company evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity.
The Company has
no loans identified as troubled debt restructurings at March 31, 2017 and December 31, 2016. Furthermore, there were no loan modifications
during the three months ended March 31, 2017 and 2016 that were troubled debt restructurings. In order to determine whether a
borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment
default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company's
internal underwriting policy.
NOTE 4 — Share-Based
Payment Plans
Stock Option Plan
The Company issues
incentive and non-statutory stock options ("options") to certain employees and directors pursuant to the 2007 Stock
Option Plan ("the Plan"), which has been approved by the stockholders. Options to purchase common stock are granted
by the Compensation Committee of the Board of Directors. The Plan allows for a maximum of 270,000 shares of common stock
to be issued. As of March 31, 2017, 262,500 shares have been issued.
On May 26, 2011,
the stockholders of the Company approved the Company's 2011 Stock Compensation Plan (the "Stock Plan"). The
Plan allows for a maximum of 404,607 shares of common stock to be issued. On August 26, 2015, the stockholders of the Company
approved an amendment to the Company's 2011 Stock Compensation Plan to authorize an additional 350,000 shares for issuance
under the plan. The Company has issued 750,545 shares under the 2011 Stock Compensation Plan as of March 31, 2017.
Under the Stock
Option Plans, options are granted with an exercise price equal to the fair value of the Company's stock at the date of the
grant. Options granted vest on five annual installments (20% per annum) and have ten year contractual terms. All options provide
for accelerated vesting upon a change in control (as defined in the Plan). Stock options exercised result in the issuance of new
shares.
The fair value
of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model that uses the
assumptions noted in the table below. Expected volatilities are based on peer volatility. The Company uses peer data to estimate
option exercise and post-vesting termination behavior. The expected term of options granted is based on peer data and represents
the period of time that options granted are expected to be outstanding, which
takes into account that the options
are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve
in effect at the time of the grant.
There were no
stock options granted during the three months ended March 31, 2017 and March 31, 2016.
(Continued)
F-
16
Table of Contents
ESQUIRE FINANCIAL HOLDINGS, INC
.
NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Dollars in thousands, except per
share data)
(Unaudited)
NOTE 4 — Share-Based
Payment Plans
(Continued)
The following
table presents a summary of the activity related to options as of March 31, 2017:
Weighted
Weighted
Average
Average
Remaining
Exercise
Contractual
Options
Price
Life
    (Years)
March 31, 2017
Outstanding at beginning of year
1,024,045
$
12.13
Granted
-
-
Exercised
-
-
Forfeited
11,000
11.36
Outstanding at period end
1,013,045
$
12.14
7.11
Vested or expected to vest
1,013,045
$
12.14
7.11
Exercisable at period end
333,315
$
11.39
3.52
The Company recognized
compensation expense related to options of $137 and $75 for the three months ended March 31, 2017 and 2016, respectively. At March
31, 2017, unrecognized compensation cost related to non-vested options was approximately $2,000 and is expected to be recognized
over a weighted average period of 3.83 years. The intrinsic value for outstanding, vested or expected to vest, and exercisable
options at March 31, 2017, was approximately $370 for all three categories.
NOTE 5 — Earnings
per Share
The two-class
method is used in the calculation of basic and diluted earnings per share. Under the two-class method, earnings available to common
shareholders for the period are allocated between common shareholders and participating securities according to participation
rights in undistributed earnings. Our preferred shares are considered participating securities. The factors used in the earnings
per share computation follow:
2017
2016
Basic
Net income available to common shareholders
$
815
$
643
Less: Earnings allocated to participating securities
11
20
Net income allocated to common shareholders
804
623
Weighted average common shares outstanding
5,002,978
4,911,870
Basic earnings per common share
$
0.16
$
0.13
Diluted
Net income allocated to common shareholders for basic earnings per share
$
804
$
623
Weighted average shares outstanding for basic earnings per common share
5,002,978
4,911,870
Add: Dilutive effects of assumed exercises of stock options
29,550
30,550
Average shares and dilutive potential common shares
5,032,528
4,942,420
Diluted earnings per common share
$
0.16
$
0.13
Stock options
totaling 864,295 and 537,795 shares of common stock were not considered in computing diluted earnings per common share for 2017
and 2016 because they were anti-dilutive.
(Continued)
F-
17
Table of Contents
ESQUIRE FINANCIAL HOLDINGS, INC
.
NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Dollars in thousands, except per
share data)
(Unaudited)
NOTE 6 — 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
In Active
Other
Significant
Markets For
Observable
Unobservable
Identical Assets
Inputs
Inputs
(Level
    1)
(Level
    2)
(Level
    3)
March 31, 2017
Assets
Available-for-sale securities
Mortgage-backed securities - agency
$
-
$
15,417
$
-
CMO's - agency
-
88,235
-
Total
$
-
$
103,652
$
-
December 31, 2016
Assets
Available-for-sale securities
Mortgage-backed securities - agency
$
-
$
16,012
$
-
CMO's - Agency
-
76,633
-
Total
$
-
$
92,645
$
-
There
were no transfers between Level 1 and Level 2 during the year. There were no assets measured on a non-recurring basis as of March
31, 2017 and December 31, 2016.
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
(Continued)
F-
18
Table of Contents
ESQUIRE FINANCIAL HOLDINGS, INC
.
NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Dollars in thousands, except per
share data)
(Unaudited)
NOTE 6 — Fair
Value Measurements
(Continued)
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:
Cash
and Due from Banks and Interest Earning Deposits
: Carrying amounts approximate fair value, since these instruments are either
payable on demand or have short-term maturities. Cash on hand and non-interest due from bank accounts are Level 1 and interest
bearing deposits are Level 2.
Securities
Available-for-Sale
: The fair values for securities available for sale are determined by quoted market prices, 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 (Level 2 inputs).
Securities,
Restricted
: It is not practical to determine the fair value of FHLB and FRB stock due to restrictions placed on its transferability.
Loans
:
The estimated fair values of real estate mortgage loans and other loans receivable are based on discounted cash flow calculations
that use available market benchmarks when establishing discount factors for the types of loans resulting in a Level 3 classification.
Exceptions may be made for adjustable rate loans (with resets of one year or less), which would be discounted
straight to their rate index plus or minus an appropriate spread. The method utilized to determine fair value does not represent
exit price.
Accrued
Interest Receivable and Payable
: For these short-term instruments, the carrying amount is a reasonable estimate of the fair
value resulting in a Level 2 or 3 classification.
Deposits
:
The estimated fair value of certificates of deposits are based on discounted cash flow calculations that use a replacement cost
of funds approach to establishing discount rates for certificates of deposits maturities resulting in a Level 2 classification.
Stated value is fair value for all other deposits resulting in a Level 1 classification.
Secured
Borrowings
: Borrowings represent secured borrowings and carrying value is a reasonable estimate of fair value resulting in
a Level 2 classification.
Off-Balance-Sheet
Liabilities
: The fair value of off-balance-sheet commitments to extend credit is estimated using fees currently charged to
enter into similar agreements. The fair value is immaterial as of March 31, 2017 and 2016.
(Continued)
F-
19
Table of Contents
ESQUIRE FINANCIAL HOLDINGS, INC
.
NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Dollars in thousands, except per
share data)
(Unaudited)
NOTE 6 — Fair
Value Measurements
(Continued)
The following tables
presents the carrying amounts and fair values of the Company's financial instruments:
Fair Value Measurement at
Carrying
March
    31, 2017, Using:
Value
(Level
    1)
(Level
    2)
(Level
    3)
Total
Financial Assets:
Cash and due from banks
$
512
$
512
$
-
$
-
$
512
Interest earning deposits
32,074
-
32,074
-
32,074
Securities available for sale
103,652
-
103,652
-
103,652
Securities, restricted
1,746
N/A
N/A
N/A
N/A
Loans, net of allowance
287,033
-
-
288,358
288,358
Accrued interest receivable
1,635
-
229
1,406
1,635
Financial Liabilities:
Certificates of deposit
22,687
-
22,743
-
22,743
Demand and other deposits
360,685
360,685
-
-
360,685
Secured borrowings
284
-
284
-
284
Accrued interest payable
2
-
2
-
2
Fair Value Measurement at
Carrying
December
    31, 2016, Using:
Value
(Level
    1)
(Level
    2)
(Level
    3)
Total
Financial Assets:
Cash and due from banks
$
437
$
437
$
-
$
-
$
437
Interest earning deposits
42,556
-
42,556
-
42,556
Securities available for sale
92,645
-
92,645
-
92,645
Securities, restricted
1,649
N/A
N/A
N/A
N/A
Loans, net of allowance
275,165
-
-
277,620
277,620
Accrued interest receivable
1,541
-
201
1,340
1,541
Financial Liabilities:
Certificates of deposit
23,955
-
23,930
-
23,930
Demand and other deposits
346,833
346,833
-
-
346,833
Secured borrowings
371
-
371
-
371
Accrued interest payable
3
-
3
-
3
(Continued)
F-
20
Table of Contents
ESQUIRE FINANCIAL HOLDINGS, INC
.
NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Dollars in thousands, except per
share data)
(Unaudited)
NOTE 7 — Accumulated
Other Comprehensive (Loss) Income
The
following is changes in accumulated other comprehensive (loss) income by component, net of tax for the three months ending March
31, 2017 and 2016:
2017
2016
Unrealized Losses on
Unrealized Losses on
Three months ended
    March 31,
Available
    for Sale Securities
Available
    for Sale Securities
Beginning balance
$
(884
)
$
(434
)
Other comprehensive income before reclassifications
105
1,023
Amounts reclassified from accumulated
    other comprehensive income
-
4
Net current period other comprehensive
    income
105
1,027
Ending balance
$
(779
)
$
593
The following
represents the reclassifications out of accumulated other comprehensive loss for the three months ended March 31, 2017, and 2016:
Three months ended
March 31,
Affected Line in the
2017
2016
Consolidated Statement
    of Income
Realized gain on securities sales
$
-
$
6
Net gains on securities available-for-sale
Income tax expense
-
(2
)
Income tax expense
Total reclassifications, net of tax
$
-
$
4
F-
21
Table of Contents
Crowe
    Horwath LLP
Independent
    Member Crowe Horwath International
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Audit Committee and Stockholders
Esquire Financial Holdings, Inc.
Jericho, New York
We have audited the accompanying consolidated
statements of financial condition of Esquire Financial Holdings, Inc. as of December 31, 2016 and 2015, and the related consolidated
statements of income, comprehensive income, changes in stockholders' equity, and cash flows for the years then ended. These consolidated
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting
in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our audit included consideration
of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting
in accordance with the standards of the Public Company Accounting Oversight Board (United States). Accordingly, we express no
such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial
statements referred to above present fairly, in all material respects, the financial position of Esquire Financial Holdings, Inc.
as of December 31, 2016 and 2015, and the results of its operations and its cash flows for the years then ended in conformity
with U.S. generally accepted accounting principles.
Crowe Horwath LLP
Livingston, New Jersey
February 24, 2017
F-
22
Table of Contents
ESQUIRE FINANCIAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL
CONDITION
(Dollars in thousands, except per share
data)
At December 31,
2016
2015
ASSETS
Cash and due from banks
$
437
$
450
Interest earning deposits
42,556
32,704
Total cash and cash equivalents
42,993
33,154
Securities available-for-sale, at fair value
92,645
84,239
Securities, restricted, at cost
1,649
1,430
Loans
278,578
224,519
Less: allowance for loan losses
(3,413
)
(2,799
)
loans, net
275,165
221,720
Premises and equipment, net
2,767
329
Accrued interest receivable
1,541
1,418
Deferred tax asset
3,108
4,347
Other assets
4,965
6,013
Total assets
$
424,833
$
352,650
LIABILITIES AND StocKHOLDERS' EQUITY
Deposits:
Demand
$
124,990
$
97,291
Savings, NOW and money market
221,843
194,496
Time
23,955
9,900
Total deposits
370,788
301,687
Secured borrowings
371
381
Accrued expenses and other liabilities
1,488
1,157
Total liabilities
372,647
303,225
Commitments and contingencies
(Note 11)
-
-
Stockholders' equity:
Preferred stock, par value $0.01; authorized   2,000,000 shares (non-voting); issued and outstanding   66,985 shares at December 31, 2016 and   157,985 shares at December 31, 2015
1
2
Common stock, par value $0.01; authorized   15,000,000 shares; issued and outstanding   5,002,950 shares at December 31, 2016, and   4,911,870 shares at December 31, 2015
50
49
Additional paid-in capital
58,845
58,456
Retained deficit
(5,826
)
(8,648
)
Accumulated other comprehensive loss
(884
)
(434
)
Total stockholders' equity
52,186
49,425
Total liabilities and stockholders' equity
$
424,833
$
352,650
See accompanying
notes to consolidated financial statements.
F-
23
Table of Contents
ESQUIRE FINANCIAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share
data)
For
    the Years Ended
December 31,
2016
2015
Interest income
Loans
$
14,071
$
10,594
Securities, available-for-sale
1,875
1,713
Interest earning deposits and other
222
144
Total interest income
16,168
12,451
Interest expense
Savings, NOW and money market deposits
414
353
Time deposits
72
78
Borrowings
25
26
Total interest expense
511
457
Net interest income
15,657
11,994
Provision for loan losses
595
930
Net interest income after provision for loan losses
15,062
11,064
Non-interest income
Customer related fees and service charges
1,180
741
Merchant processing income
2,939
2,202
Net gains on securities available-for-sale
6
-
Total non-interest income
4,125
2,943
Non-interest expense
Employee compensation and benefits
8,244
6,251
Occupancy and equipment, net
1,604
1,412
Professional and consulting services
1,642
1,699
Data processing
1,369
1,187
Advertising and marketing
430
334
Travel and business relations
324
301
OCC assessments
112
105
FDIC assessments
99
245
Other operating expenses
775
637
Total non-interest expense
14,599
12,171
Net income before income taxes
4,588
1,836
Income tax expense
1,766
664
Net income
$
2,822
$
1,172
Earnings per common share
(See Note 10)
Basic
$
0.56
$
0.25
Diluted
0.55
0.25
See accompanying
notes to consolidated financial statements.
F-
24
Table of Contents
ESQUIRE FINANCIAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
(Dollars in thousands)
For the Years Ended
December 31,
2016
2015
Net income
$
2,822
$
1,172
Other comprehensive loss:
Unrealized losses arising during the period on securities available-for-sale
(738
)
(304
)
Reclassification adjustment for net gains   included in net income
6
-
Tax effect
282
120
Total other comprehensive loss
(450
)
(184
)
Total comprehensive income
$
2,372
$
988
See accompanying
notes to consolidated financial statements.
F-
25
Table of Contents
ESQUIRE FINANCIAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY
(Dollars in thousands)
Preferred
shares
Common
shares
Preferred
stock
Common
stock
Additional
paid in
capital
Retained
deficit
Accumulated
other
comprehensive
loss
Total
stockholders'
equity
Balance
    at January 1, 2015
157,985
4,088,410
$
2
$
41
$
48,569
$
(9,820
)
$
(250
)
$
38,542
Net income
-
-
-
-
-
1,172
-
1,172
Other comprehensive loss
-
-
-
-
-
-
(184
)
(184
)
Issuance of common stock
    net of offering costs
-
823,460
-
8
9,749
-
-
9,757
Stock
    options expense
-
-
-
-
138
-
-
138
Balance
    at December 31, 2015
157,985
4,911,870
2
49
58,456
(8,648
)
(434
)
49,425
Net income
-
-
-
-
-
2,822
-
2,822
Other comprehensive loss
-
-
-
-
-
-
(450
)
(450
)
Exchange of preferred
    stock for common stock
(91,000
)
91,000
(1
)
1
-
-
-
-
Issuance of common stock
-
80
-
-
1
-
-
1
Stock
    options expense
-
-
-
-
388
-
-
388
Balance
    at December 31, 2016
66,985
5,002,950
$
1
$
50
$
58,845
$
(5,826
)
$
(884
)
$
52,186
See accompanying
notes to consolidated financial statements.
F-
26
Table of Contents
ESQUIRE FINANCIAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
For
    the Years Ended
December 31,
2016
2015
Cash flows from operating activities:
Net income
$
2,822
$
1,172
Adjustments to reconcile net income to net cash used in operating activities:
Provision for loan losses
595
930
Net gains on securities available-for-sale
(6
)
-
Depreciation
166
237
Stock options expense
388
138
Net amortization:
Securities
344
256
Loans
421
395
Changes in other assets and liabilities:
Accrued interest receivable
(123
)
(321
)
Deferred tax asset
1,521
546
Other assets
(202
)
(2,123
)
Accrued expenses and other liabilities
172
292
Write-offs related to offices closed
221
47
Net cash provided by operating activities
6,319
1,569
Cash flows from investing activities:
Originations and purchases of loans, net of principal repayments
(54,461
)
(52,533
)
Purchases of securities available-for-sale
(30,235
)
(24,664
)
Settlement of sales of securities available-for-sale
-
6,719
Proceeds of sales of securities available-for-sale
4,068
-
Principal repayments on securities available-for-sale
16,691
10,790
Purchase of securities, restricted
(453
)
(1,202
)
Redemption of securities, restricted
234
9
Other assets
1,250
-
Purchases of premises and equipment
(2,666
)
(85
)
Net cash used in investing activities
(65,572
)
(60,966
)
Cash flows from financing activities:
Net increase in deposits
69,101
10,913
Decrease in secured borrowings
(10
)
(10
)
Proceeds from the issuance of common stock
1
9,757
Net cash provided by financing activities
69,092
20,660
Net increase (decrease) in cash and cash equivalents
9,839
(38,737
)
Cash and cash equivalents at beginning of the period
33,154
71,891
Cash and cash equivalents at end of the period
$
42,993
$
33,154
F-
27
Table of Contents
ESQUIRE FINANCIAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
For the Years Ended
December 31,
2016
2015
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest
$
508
$
458
Taxes
234
95
Noncash disclosures:
Exchange of preferred stock for common stock
1
-
See accompanying
notes to consolidated financial statements.
F-
28
Table of Contents
ESQUIRE FINANCIAL HOLDINGS, INC
.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
(Dollars in thousands, except per share
data)
NOTE 1 — Business
and Summary of Significant Accounting Policies
Business
Esquire Financial
Holdings, Inc. (the "Company") is a registered bank holding company and the parent company of Esquire Bank, National
Association (the "Bank"). In August of 2015, the Company and the Bank were converted from a savings and loan holding
company and savings bank to a bank holding company and national bank, respectively, and the Company, formerly a Delaware corporation,
was reincorporated through a merger to a Maryland corporation.
The Bank is an independent,
full-service national bank that serves the banking needs of law professionals, professional service firms, small to mid-sized businesses
and individuals. The Bank was established in 2006 and began operations in October 2006. The Bank's headquarters is located
in Jericho, New York. The Bank also operates a branch in Garden City, New York and an administrative office in Palm Beach Gardens,
Florida.
As a full-service
bank, the Bank offers checking, savings, money market and time deposits; a wide range of commercial and consumer loans, as well
as customary banking services. Through electronic delivery channels, the Bank provides bill payment services, wire transfers, ACH
origination, account transfers and real time deposit relationship updates. These innovative services are complimented with a full
range of traditional banking products and services. While the Bank is a full-service institution available to all potential customers,
the focus is marketing to law firms and other professional service firms, small to mid-sized businesses and individuals in the
local community surrounding the branch office and New York boroughs in order to grow the deposit base. Additionally, due, in part,
to the substantial ties that many of the board members and organizers have to the legal community, the Bank concentrates most of
its marketing efforts on the legal community in these areas and nationally.
The Bank entered into
the merchant service business as an acquiring bank in which credit and debit card transactions are settled on behalf of merchants.
The revenue earned on behalf of merchants, net of expenses, is paid to the independent sales organizations (ISO's). The Bank's
revenue from this transaction is shown as merchant processing income on the statements of income. Revenue is recognized when earned.
The consolidated financial
statements include Esquire Financial Holdings, Inc. and its wholly owned subsidiary, Esquire Bank, N.A. and are referred to as
"the Company." Intercompany transactions and balances are eliminated in consolidation.
Basis of Presentation and Use of Estimates
The accounting and
financial reporting policies are in conformity with U.S. generally accepted accounting principles (GAAP). The preparation of financial
statements requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities,
the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income
and expenses during the reporting period. Such estimates are subject to change in the future as additional information becomes
available or previously existing circumstances are modified. Actual results could differ from those estimates.
Statement of Cash Flows
For purposes of the
accompanying statements of cash flows, cash and cash equivalents are defined as the amounts included in the consolidated statements
of financial condition under the captions "Cash and Due from Banks" and "Interest Earning Deposits", with
contractual maturities of less than 90 days. Net cash flows are reported for customer loan and deposit transactions.
Securities
All securities are
classified as available-for-sale and carried at fair value. Unrealized gains and losses on these securities are reported, net of
applicable taxes, as a separate component of accumulated other comprehensive income (loss), a component of stockholders'
equity.
Interest income on
securities, including amortization of premiums and accretion of discounts, is recognized using the level yield method without anticipating
prepayments (except for mortgage-backed securities where prepayments are
F-
29
Table of Contents
ESQUIRE FINANCIAL HOLDINGS, INC
.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
(Dollars in thousands, except per share
data)
NOTE 1 — Business
and Summary of Significant Accounting Policies (
Continued)
anticipated) over the lives of the individual
securities. Realized gains and losses on sales of securities are computed using the specific identification method.
Loans
Loans that management
has the intent and ability to hold for the foreseeable future until maturity or payoff are stated at the principal amount outstanding,
net of deferred loan fees and costs for originated loans and net of unamortized premiums or discounts for purchased loans. Interest
income is recognized using the level yield method. Net deferred loan fees, origination costs, unamortized premiums or discounts
are recognized in interest income over the loan term as a yield adjustment.
Non-Accrual
Interest income on mortgage and commercial
loans is discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection.
Consumer loans are typically charged off no later than 120 days past due. Past due status is based on the contractual terms of
the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest
is considered doubtful. Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous
loans that are collectively evaluated for impairment and individually classified impaired loans. A loan is moved to non-accrual
status in accordance with the Company's policy, typically after 90 days of non-payment.
All interest accrued
but not received for loans placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted
for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when
all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.
Provision and Allowance for Loan Losses
The allowance for
loan losses is a valuation allowance for probable incurred credit losses. The allowance for loan losses is increased by provisions
for loan losses charged to income. Losses are charged to the allowance when all or a portion of a loan is deemed to be uncollectible.
Subsequent recoveries of loans previously charged off are credited to the allowance for loan losses when realized. Management estimates
the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific
borrower situations and estimated collateral values, economic conditions and other factors. Allocations of the allowance may be
made for specific loans, but the entire allowance is available for any loan that, in Management's judgment, should be charged
off.
The allowance consists
of specific and general components. The specific component relates to loans that are individually classified as impaired when,
based on current information and events, it is probable that the Company will be unable to collect all amounts due according to
the contractual terms of the loan agreement.
Factors considered
by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal
and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified
as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into
consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for
the delay, the borrower's prior payment record, and the amount of the shortfall in relation to the principal and interest
owed.
All loans, except
for consumer loans are individually evaluated for impairment. If a loan is impaired, a portion of the allowance is allocated as
a specific allowance. The measurement of an impaired loan is based on (i) the present value of expected future cash flows
discounted at the loan's effective interest rate, (ii) the loan's observable market price or (iii) the fair
value of the collateral if the loan is collateral dependent.
Loans for which the
terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered
troubled debt restructurings and classified as impaired.
F-
30
Table of Contents
ESQUIRE FINANCIAL HOLDINGS, INC
.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
(Dollars in thousands, except per share
data)
NOTE 1 — Business
and Summary of Significant Accounting Policies
(Continued)
Troubled debt restructurings are separately
identified for impairment disclosures and are measured at the present value of estimated future cash flows using the loan's
effective rate at inception. If a troubled debt restructuring is considered to be a collateral dependent loan, the loan is reported,
net, at the fair value of the collateral. For troubled debt restructurings that subsequently default, the Company determines the
amount of reserve in accordance with the accounting policy for the allowance for loan losses.
The general component
is based on historical loss experience adjusted for current factors. The historical loss experience is determined by portfolio
segment and is based on the actual loss history experienced by the Company. This actual loss experience is supplemented with other
economic factors based on the risks present for each portfolio segment. These economic factors include consideration of the following:
levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume
and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures,
and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends
and conditions; industry conditions; and effects of changes in credit concentrations.
Management has
identified the following loan segments: Commercial Real Estate, Multifamily, Construction, Commercial, 1-4 Family Residential
and Consumer. The risks associated with a concentration in real estate loans include potential losses from fluctuating values
of land and improved properties. Commercial Real Estate and Multifamily loans are expected to be repaid from the cash flow of
the underlying property so the collective amount of rents must be sufficient to cover all operating expenses, property
management and maintenance, taxes and debt service. Increases in vacancy rates, interest rates or other changes in general
economic conditions can all have an impact on the borrower and their ability to repay the loan. Construction loans are
considered riskier than commercial financing on improved and established commercial real estate. The risk of potential loss
increases if the original cost estimates or time to complete are significantly off. The remainder of the loan portfolio is
comprised of commercial and consumer loans. The primary risks associated with the commercial loans is the cash flow of the
business, the experience and quality of the borrowers' management, the business climate, and the impact of economic
factors. The primary risks associated with 1-4 Family Residential and Consumer loans relate to the borrower, such as the risk
of a borrower's unemployment as a result of deteriorating economic conditions or the amount and nature of a
borrower's other existing indebtedness, and the value of the collateral securing the loan if the Bank must take
possession of the collateral
.
Premises and Equipment
Premises and equipment,
including leasehold improvements, are stated at cost, net of accumulated depreciation and amortization. Equipment, which includes
furniture and fixtures, are depreciated over the assets' estimated useful lives using the straight-line method (three to
ten years). Amortization of leasehold improvements is recognized on a straight-line basis over the lesser of the expected
lease term or the estimated useful life of the asset. Costs incurred to improve or extend the life of existing assets are capitalized.
Repairs and maintenance are charged to expense.
Federal Home Loan Bank (FHLB) Stock
The Bank is a member
of the FHLB system. Members are required to own a certain amount of stock based on the level of mortgage related assets, borrowings
and other factors. FHLB stock is carried at cost, classified as a restricted security and periodically evaluated for impairment
based on the ultimate recovery of par value. Dividends are reported as interest income.
Federal Reserve Bank (FRB) Stock
The Bank is a member
of its regional FRB. FRB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment
based on ultimate recovery of par value. Dividends are reported as interest income.
Loan Commitments and Related Financial
Instruments
Financial instruments
include off balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, are issued to
meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral
or ability to repay. Such financial instruments are recorded when they are funded.
F-
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ESQUIRE FINANCIAL HOLDINGS, INC
.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
(Dollars in thousands, except per share
data)
NOTE 1 — Business
and Summary of Significant Accounting Policies
(Continued)
Transfers of Financial Assets
Transfers of financial
assets are accounted for as sales, when control over the assets has been relinquished. Control over transferred assets is deemed
to be surrendered when the assets have been isolated from the Company, the transferee obtains the right (free of conditions that
constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the Company does not maintain
effective control over the transferred assets through an agreement to repurchase them before their maturity.
Income Taxes
Income taxes are provided
for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable
to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized
in income in the period the change occurs. Deferred tax assets are reduced, through a valuation allowance, if necessary, by the
amount of such benefits that are not expected to be realized based on current available evidence.
A tax position is
recognized as a benefit only if it is "more likely than not" that the tax position would be sustained in a tax examination,
with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than
50% likely of being realized on examination. For tax positions not meeting the "more likely than not" test, no tax
benefit is recorded. The Company recognizes interest and/or penalties related to income tax matters in income tax expense.
Earnings per Common Share
Basic earnings per
common share is net earnings allocated to common stock divided by the weighted average number of common shares outstanding during
the period. All outstanding preferred shares are considered participating securities for computation of basic earnings per common
share. Diluted earnings per common share include the dilutive effect of additional potential common shares issuable under stock
options.
Share-Based Payment
Share based payment
guidance requires the Company to recognize the grant-date fair value of stock options and other equity-based compensation issued
to employees and non-employees in the statements of income. A Black-Scholes model is utilized to estimate the fair value of stock
options. Compensation cost for stock options are recognized as non-interest expense in the statement of income on a straight-line
basis over the vesting period of each stock option grant. Compensation cost for stock options includes the impact of an estimated
forfeiture rate. At December 31, 2016, no stock options had vesting conditions linked to the performance of the Company or
market conditions.
Dividend Restriction
Banking regulations
require maintaining certain capital levels and may limit the dividends paid by the bank to the holding company or by the holding
company to shareholders.
Segment Reporting
The Company's
operations are exclusively in the financial services industry and include the provision of traditional banking services. Management
evaluates the performance of the Company based on only one business segment, that of community banking. In the opinion of management,
the Company does not have any other reportable segments as defined by Accounting Standards Codification (ASC) Topic 280, "Disclosure
about Segments of an Enterprise and Related Information".
Restrictions on Cash
Cash on hand or on
deposit with the FRB was required to meet regulatory reserve and clearing requirements.
F-
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ESQUIRE FINANCIAL HOLDINGS, INC
.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
(Dollars in thousands, except per share
data)
NOTE 1 — Business
and Summary of Significant Accounting Policies
(Continued)
Reclassifications
Some items in the
prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on prior
year net income or stockholders' equity.
Comprehensive Income
Comprehensive income
(loss) consists of net income and other comprehensive (loss) income. Other comprehensive (loss) income includes unrealized gains
and losses on securities available-for-sale which are also recognized as separate components of equity.
Fair Value of Financial Instruments
Fair values of financial
instruments are estimated using relevant market information and other assumptions, as more fully disclosed in a separate note.
Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments,
and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions
could significantly affect the estimates.
Loss Contingencies
Loss contingencies,
including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood
of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there now are such
matters that will have a material effect on the consolidated financial statements.
New Accounting Pronouncements
Accounting Standards
Update (ASU) 2014-09, "Revenue from Contracts with Customers (Topic 606)" implements a common revenue standard that
clarifies the principles for recognizing revenue. The core principle of ASU 2014-09 is that an entity should recognize revenue
to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following
steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine
the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue
when (or as) the entity satisfies a performance obligation. In July 2015, the (Financial Accounting Standards Board FASB) deferred
the effective date of the ASU by one year which means ASU 2014-09 will be effective for the Company on January 1, 2018. The Company
is currently evaluating the potential impact of ASU 2014-09 on its consolidated financial statements.
On January 5, 2016,
the FASB issued ASU 2016-01, "Financial Instruments–Overall: Recognition and Measurement of Financial Assets and Financial
Liabilities" (the ASU). Under this ASU, the current GAAP model is changed in the areas of accounting for equity investments,
financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments.
In addition, the FASB clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting
from unrealized losses on available-for-sale debt securities. The ASU will be effective for public business entities in fiscal
years beginning after December 15, 2017, including interim periods within those fiscal years. Adoption of this standard is not
expected to have a material effect on the Company's operating results or financial condition.
On February 25, 2016,
the FASB completed its Leases project by issuing ASU No. 2016-02, "Leases (Topic 842)." The new guidance affects any
organization that enters into a lease, or sublease, with some specified exemptions. Under the new guidance, a lessee will
be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP,
the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend
on its classification as a finance or operating lease. However, unlike current GAAP, which requires only capital leases to be recognized
on the balance sheet, the new ASU will require both types of leases to be recognized on the balance sheet. The ASU will also
require expanded disclosures. The ASU on leases will take effect for fiscal years beginning after December 15, 2018, and for
interim periods within those fiscal years. The Company is currently evaluating the impact of the ASU on its financial condition
and results of operations.
F-
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Table of Contents
ESQUIRE FINANCIAL HOLDINGS, INC
.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
(Dollars in thousands, except per share
data)
NOTE 1 — Business
and Summary of Significant Accounting Policies
(Continued)
In March 2016, the
FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic 718): "Improvements to Employee Share-Based Payment
Accounting." This update includes multiple provisions intended to simplify various aspects of the accounting for share-based
payments. For public companies, the amendments in this update are effective for annual periods beginning after December 15, 2016,
and interim periods within those annual periods. Early adoption is permitted for any organization in any interim or annual period.
Adoption of this standard is not expected to have a material effect on the Company's operating results or financial condition.
On June 16, 2016,
the FASB issued Accounting Standards Update No. 2016-13, "Financial Instruments – Credit Losses (Topic 326): Measurement
of Credit Losses on Financial Instruments" (the ASU). This ASU replaces the incurred loss model with an expected loss
model, referred to as "current expected credit loss" (CECL) model. It will significantly change estimates
for credit losses related to financial assets measured at amortized cost, including loans receivable, held-to-maturity (HTM) debt
securities and certain other contracts. This ASU will be effective for the Company in fiscal years beginning after December 15,
2019, including interim periods within those fiscal years. The Company is currently in the process of evaluating the impact
of this ASU on its financial position, results of operations and cash flows.
Subsequent Events
The Bank has evaluated
subsequent events for recognition and disclosure through the date of issuance.
NOTE
2 — Securities
Available-for-Sale Securities
The amortized cost,
gross unrealized gains and losses and estimated fair value of securities available-for-sale were as follows at December 31:
Gross
Gross
Amortized
Unrealized
Unrealized
Fair
Cost
Gains
Losses
Value
2016
Mortgage-backed securities - agency
$
16,417
$
12
$
(417
)
$
16,012
Collateralized mortgage obligations (CMO's) – agency
77,677
56
(1,100
)
76,633
Total available-for-sale
$
94,094
$
68
$
(1,517
)
$
92,645
2015
Government agency debentures
$
4,064
$
-
$
(63
)
$
4,001
Mortgage-backed securities - agency
17,445
27
(325
)
17,147
Collateralized mortgage obligations (CMO's) – agency
63,447
116
(472
)
63,091
Total available-for-sale
$
84,956
$
143
$
(860
)
$
84,239
The amortized cost
and fair value of debt securities are shown by contractual maturity. Expected maturities may differ from contractual maturities
if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a
single maturity date are shown separately.
F-
34
Table of Contents
ESQUIRE FINANCIAL HOLDINGS, INC
.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
(Dollars in thousands, except per share
data)
NOTE
2 — Securities
(Continued)
December
    31, 2016
Amortized
Cost
Fair
Value
Government agency debentures
Due from one to five years
$
-
$
-
Five to ten years
-
-
Mortgage-backed securities - agency
16,417
16,012
CMO's – agency
77,677
76,633
Total
$
94,094
$
92,645
Mortgage-backed securities
included all residential pass-through certificates guaranteed by FHLMC, FNMA, or GNMA and the CMO's are backed by government
agency pass-through certificates. The 2016 and 2015 pass-through certificates are fixed rate instruments. CMO's, by virtue
of the underlying residential collateral or structure, are fixed rate current pay sequentials or planned amortization classes (PAC's).
When purchasing investment
securities, the Company's overall interest-rate risk profile is considered as well as the adequacy of expected returns relative
to risks assumed, including prepayments. In continuously managing the investment securities portfolio, management occasionally
sells investment securities in response to, or in anticipation of, changes in interest rates and spreads, actual or anticipated
prepayments, liquidity needs and credit risk associated with a particular security.
The proceeds from
sales and calls of securities and the associated gains and losses are listed below:
2016
2015
Proceeds
$
4,068
$
-
Gross gains
6
-
Gross losses
-
-
The tax provision
related to these gains was $2 for 2016.
At December 31,
2016, securities having a fair value of $76,633 were pledged to the FHLB for borrowing capacity totaling $72,837. At December 31,
2015, securities having a fair value of $73,100 were pledged to the FHLB for borrowing capacity totaling $69,400. At December 31,
2016 and 2015, the Company had no outstanding FHLB advances.
At December 31,
2016, securities having a fair value of $16,012 were pledged to the FRB of New York for borrowing capacity totaling $15,580.
At December 31, 2015, securities having a fair value of $11,100 were pledged to FRB of New York for borrowing capacity totaling
$10,800. At December 31, 2016 and 2015, the Company had no outstanding FRB borrowings.
The following table
provides the gross unrealized losses and fair value, aggregated by investment category and length of time the individual securities
have been in a continuous unrealized loss position, as of December 31:
Less Than
    12 Months
12 Months
    or Longer
Total
Gross
Gross
Gross
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
Value
Losses
Value
Losses
Value
Losses
December 31, 2016
Mortgage-backed securities – agency
$
13,936
$
(417
)
$
-
$
-
$
13,936
$
(417
)
CMO's - agency
50,269
(859
)
5,973
(241
)
56,242
(1,100
)
Total temporarily impaired securities
$
64,205
$
(1,276
)
$
5,973
$
(241
)
$
70,178
$
(1,517
)
F-
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Table of Contents
ESQUIRE FINANCIAL HOLDINGS, INC
.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
(Dollars in thousands, except per share
data)
NOTE
2 — Securities
(Continued)
Less Than
    12 Months
12 Months
    or Longer
Total
Gross
Gross
Gross
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
Value
Losses
Value
Losses
Value
Losses
December 31, 2015
Government agency debentures
$
2,029
$
(34
)
$
1,972
$
(29
)
$
4,001
$
(63
)
Mortgage-backed securities – agency
10,310
(240
)
4,228
(85
)
14,538
(325
)
CMO's  - agency
23,401
(147
)
7,687
(325
)
31,088
(472
)
Total temporarily impaired securities
$
35,740
$
(421
)
$
13,887
$
(439
)
$
49,627
$
(860
)
Management reviews
the investment portfolio on a quarterly basis to determine the cause, magnitude and duration of declines in the fair value of each
security. In estimating other-than-temporary impairment (OTTI), management considers many factors including: (1) the length
of time and extent that fair value has been less than cost, (2) the financial condition and near term prospects of the issuer,
(3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Company has the intent to
sell the security or more likely than not will be required to sell the security before its anticipated recovery. If either of the
criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized
as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split
into two components as follows: (1) OTTI related to credit loss, which must be recognized in the income statement and (2) OTTI
related to other factors, which is recognized in other comprehensive income. The credit loss is defined as the difference between
the present value of the cash flows expected to be collected and the amortized cost basis. The assessment of whether any other
than temporary decline exists may involve a high degree of subjectivity and judgment and is based on the information available
to management at a point in time. Management evaluates securities for OTTI at least on a quarterly basis, and more frequently when
economic or market conditions warrant such an evaluation.
At December 31,
2016, securities in unrealized loss positions were issuances from government sponsored entities. Due to the decline in fair value
attributable to changes in interest rates and illiquidity, not credit quality and because the Company does not have the intent
to sell the securities and it is likely that it will not be required to sell the securities before their anticipated recovery,
the Company does not consider the securities to be other-than-temporarily impaired at December 31, 2016.
No impairment charges
were recorded in 2016 and 2015.
F-
36
Table of Contents
ESQUIRE FINANCIAL HOLDINGS, INC
.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
(Dollars in thousands, except per share
data)
NOTE 3 — Loans
The composition of
loans by class is summarized as follows at December 31:
2016
%
    of
Total
2015
%
    of
Total
1-4 family residential
$
49,597
18
%
$
28,531
13
%
Commercial
106,064
38
83,563
37
Multifamily
83,410
30
71,184
32
Commercial real estate
22,198
8
21,272
10
Construction
5,610
2
5,297
2
Consumer
10,571
4
13,556
6
Total Loans
277,450
100
%
223,403
100
%
Deferred costs and unearned premiums, net
1,128
1,116
Allowance for loan losses
(3,413
)
(2,799
)
Net loans
$
275,165
$
221,720
The following tables
present the activity in the allowance for loan losses by class for the years ending December 31, 2016 and 2015:
1-4 Family
Commercial
Residential
Commercial
Multifamily
Real Estate
Construction
Consumer
Total
December 31, 2016
Allowance for loan losses:
Beginning balance
$
213
$
1,536
$
533
$
230
$
134
$
153
$
2,799
Provision (credit) for loan losses
147
372
88
8
7
(27
)
595
Recoveries
-
26
-
-
-
-
26
Loans charged-Off
-
-
-
-
-
(7
)
(7
)
Total ending allowance balance
$
360
$
1,934
$
621
$
238
$
141
$
119
$
3,413
December 31, 2015
Allowance for loan losses:
Beginning balance
$
162
$
1,222
$
528
$
97
$
27
$
129
$
2,165
Provision (credit) for loan losses
51
610
5
133
107
24
930
Recoveries
-
-
-
-
-
-
-
Loans charged-off
-
(296
)
-
-
-
-
(296
)
Total ending allowance balance
$
213
$
1,536
$
533
$
230
$
134
$
153
$
2,799
F-
37
Table of Contents
ESQUIRE FINANCIAL HOLDINGS, INC
.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
(Dollars in thousands, except per share
data)
NOTE 3 — Loans
(Continued)
The following tables
present the balance in the allowance for loan losses and the recorded investment in loans by class and based on impairment method
as of December 31, 2016 and 2015:
1-4 Family
Commercial
Residential
Commercial
Multifamily
Real Estate
Construction
Consumer
Total
December 31, 2016
Allowance for loan losses:
Ending allowance
Balance attributable to loans:
Individually evaluated for impairment
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Collectively evaluated for impairment
360
1,934
621
238
141
119
3,413
Total ending allowance balance
$
360
$
1,934
$
621
$
238
$
141
$
119
$
3,413
Loans:
Loans individually evaluated for impairment
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Loans collectively evaluated for impairment
49,597
106,064
83,410
22,198
5,610
10,571
277,450
Total ending loans balance
$
49,597
$
106,064
$
83,410
$
22,198
$
5,610
$
10,571
$
277,450
Recorded investment
is not adjusted for accrued interest, unearned premiums or deferred costs due to immateriality.
F-
38
Table of Contents
ESQUIRE FINANCIAL HOLDINGS, INC
.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
(Dollars in thousands, except per share
data)
NOTE 3 — Loans
(Continued
)
1-4 Family
Commercial
Residential
Commercial
Multifamily
Real Estate
Construction
Consumer
Total
December 31, 2015
Allowance for loan losses:
Ending allowance
Balance attributable to loans:
Individually evaluated for impairment
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Collectively evaluated for impairment
213
1,536
533
230
134
153
2,799
Total ending allowance balance
$
213
$
1,536
$
533
$
230
$
134
$
153
$
2,799
Loans:
Loans individually evaluated for impairment
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Loans collectively evaluated for impairment
28,531
83,563
71,184
21,272
5,297
13,556
223,403
Total ending loans balance
$
28,531
$
83,563
$
71,184
$
21,272
$
5,297
$
13,556
$
223,403
Non-Performing Loans
Non-performing loans
include loans 90 days past due and still accruing and non-accrual loans. At December 31, 2016 and 2015, none of the Company's
loans met these conditions.
The following tables
present the aging of the recorded investment in past due loans by class of loans as of December 31, 2016 and 2015:
30 - 59
60 - 89
Greater than
Days
Days
90 Days
Total
Loans Not
Past Due
Past Due
Past Due
Past Due
Past Due
Total
December 31, 2016
1-4 family residential
$
203
$
-
$
-
$
203
$
49,394
$
49,597
Commercial
-
-
-
-
106,064
106,064
Multifamily
-
-
-
-
83,410
83,410
Commercial real estate
-
-
-
-
22,198
22,198
Construction
-
-
-
-
5,610
5,610
Consumer
-
-
-
-
10,571
10,571
Total
$
203
$
-
$
-
$
203
$
277,247
$
277,450
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39
Table of Contents
ESQUIRE
FINANCIAL HOLDINGS, INC
.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
December 31,
2016 and 2015
(Dollars
in thousands, except per share data)
NOTE 3 — Loans
(Continued)
30 - 59
60 - 89
Greater than
Days
Days
90 Days
Total
Loans Not
Past Due
Past Due
Past Due
Past Due
Past Due
Total
December 31, 2015
1-4 family residential
$
-
$
-
$
-
$
-
$
28,531
$
28,531
Commercial
-
-
-
-
83,563
83,563
Multifamily
-
-
-
-
71,184
71,184
Commercial real estate
-
-
-
-
21,272
21,272
Construction
-
-
-
-
5,297
5,297
Consumer
-
-
-
-
13,556
13,556
Total
$
-
$
-
$
-
$
-
$
223,403
$
223,403
Credit
Quality Indicators
The
Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt
such as: current financial information, historical payment experience, credit documentation, public information, and current economic
trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis
is performed whenever a credit is extended, renewed or modified, or when an observable event occurs indicating a potential decline
in credit quality, and no less than annually for large balance loans.
The
Company uses the following definitions for risk ratings:
Special
Mention
- Loans classified as special mention have a potential weakness that deserves management's close attention. If left
uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's
credit position at some future date.
Substandard
- Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or
of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation
of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies
are not corrected.
Doubtful
-
Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added
characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts,
conditions, and values, highly questionable and improbable.
Loans
not meeting the criteria above that are analyzed individually as part of the above described process are considered to be
pass rated loans.
Based
on the most recent analysis performed, the risk category of loans by class of loans is as follows:
Special
Pass
Mention
Substandard
Doubtful
December 31, 2016
1-4 family residential
$
49,597
$
-
$
-
$
-
Commercial
105,777
287
-
-
Multifamily
83,410
-
-
-
Commercial real estate
22,198
-
-
-
Construction
5,610
-
-
-
Consumer
10,571
-
-
-
Total
$
277,163
$
287
$
-
$
-
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FINANCIAL HOLDINGS, INC
.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
December 31,
2016 and 2015
(Dollars
in thousands, except per share data)
NOTE 3 — Loans
(Continued)
Special
Pass
Mention
Substandard
Doubtful
December 31, 2015
1-4 family residential
$
28,531
$
-
$
-
$
-
Commercial
80,765
2,798
-
-
Multifamily
71,184
-
-
-
Commercial real estate
21,272
-
-
-
Construction
5,297
-
-
-
Consumer
13,556
-
-
-
Total
$
220,605
$
2,798
$
-
$
-
The
Company considers the performance of the loan portfolio and its impact on the allowance for loan losses. For residential and consumer
loan classes, the Company evaluates credit quality based on the aging status of the loan, which was previously presented, and
by payment activity.
The
Company has no loans identified as troubled debt restructurings at December 31, 2016 and 2015. Furthermore, there were
no loan modifications during 2016 and 2015 that were troubled debt restructurings. In order to determine whether a borrower
is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment
default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the
Company's internal underwriting policy.
Related
Party Loans
Loans
to related parties include loans to directors, their related companies and executive officers of the Company.
Loans
to principal officers, directors, and their affiliates during 2016 were as follows:
Beginning balance
$
6,800
New advances
100
Repayments
(3,536
)
Ending balance
$
3,364
Deposits
from principal officers, directors, and their affiliates at year-end 2016 and 2015 were $4,944 and $6,143.
NOTE 4 — Premises
and Equipment
The
following is a summary of premises and equipment at December 31:
2016
2015
Leasehold improvements
$
1,575
$
176
Equipment
2,876
1,947
Construction in progress
-
23
4,451
2,146
Less: accumulated depreciation and amortization
(1,684
)
(1,817
)
Total premises and equipment, net
$
2,767
$
329
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FINANCIAL HOLDINGS, INC
.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
December 31,
2016 and 2015
(Dollars
in thousands, except per share data)
NOTE 4 — Premises
and Equipment
(Continued)
Depreciation
and amortization of premises and equipment, reflected as a component of occupancy and equipment, net in the statements of income,
was $166 and $237 for the periods ended December 31, 2016 and 2015, respectively. At year end 2016, management closed its
New York City administrative office. This resulted in a $221 expense comprised of leasehold improvements written off and accrual
of the remaining lease obligation.
NOTE 5 — Deposits
The
contractual maturities of certificates of deposit at December 31, 2016, are as follows:
Total
2017
$
22,335
2018
1,620
Total
$
23,955
Certificates
of deposits greater than $250 were $751 as of December 31, 2016, and $745 at December 31, 2015. CDARS reciprocal deposits
totaled approximately $15,800 at December 31, 2016 and $1,800 at December 31, 2015.
NOTE 6 — Secured
Borrowings
The
Company had a secured borrowing of $371 and $381 as of December 31, 2016 and 2015, respectively, relating to certain loan
participations sold by the Company that did not qualify for sales treatment.
NOTE 7 — Income
Taxes
The
following summarizes components of income tax expense for the years ended December 31:
2016
2015
Current
Federal expense
$
147
$
37
State and city expense
98
82
Total current tax expense
245
119
Deferred
Federal expense
1,474
641
State and city expense
47
(96
)
Tax expense
1,521
545
Tax expense
$
1,766
$
664
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Table of Contents
ESQUIRE
FINANCIAL HOLDINGS, INC
.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
December 31,
2016 and 2015
(Dollars
in thousands, except per share data)
NOTE 7 — Income
Taxes
(Continued)
The
following is a reconciliation of the Company's statutory federal income tax rate of 34% to its effective tax rate at December 31:
2016
2015
Federal tax expense at statutory rate
$
1,560
$
624
State and local income taxes, net of federal income tax expense
97
(16
)
Incentive stock options
71
4
Change to deferred tax as a result of tax reform
-
16
Other
38
36
Net tax expense
$
1,766
$
664
The
following summarizes the components of the Company's deferred tax assets and deferred tax liabilities at December 31:
2016
2015
Deferred tax assets:
Net operating loss carry forwards
$
1,136
$
2,516
Pre-opening costs
172
208
Stock options expense
308
236
Allowance for loan loss
1,208
954
Fixed assets
(31
)
136
Unrealized loss on securities available-for-sale
565
283
Other
145
81
Total deferred tax assets
3,503
4,414
Deferred tax liabilities:
Deferred rent
(43
)
-
Deferred loan fees
(352
)
(67
)
Total deferred tax liabilities
(395
)
(67
)
Net deferred tax assets
$
3,108
$
4,347
The
Company has federal, state, and city net operating loss carryforwards of $2,168, $9,743, and $2,714, respectively, as of December 31,
2016. The net operating losses are available to reduce future taxable income. They begin to expire in 2026.
Realization
of deferred tax assets is dependent upon the generation of future taxable income. A valuation allowance is provided when it more
likely than not that some portion of the deferred tax asset will not be realized. Based on its evaluation, the Company has determined
that it is more likely than not that the deferred tax asset as of December 31, 2016 and 2015, will be realized.
The
Company does not have any unrecognized tax benefits at December 31, 2016 or 2015, and does not expect this to increase significantly
in the next twelve months. There were no interest and penalties recorded in the statements of operations for the years ended December 31,
2016 and 2015. The Company is subject to U.S. federal income tax as well as income tax of the state of New York and New York City.
The Company is no longer subject to examination by taxing authorities for years before 2013.
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FINANCIAL HOLDINGS, INC
.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
December 31,
2016 and 2015
(Dollars
in thousands, except per share data)
NOTE 8 — Savings
Plan
A
savings plan is maintained under section 401(k) of the Internal Revenue Code and covers substantially all current full-time
employees. Newly hired employees can elect to participate in the savings plan after completing one month of service. Under the
provisions of the savings plan, the Company does not match funds for employee contributions. Participants can invest their account
balances into several investment alternatives.
NOTE 9 — Share-Based
Payment Plans
Stock
Option Plan
The
Company issues incentive and non-statutory stock options ("options") to certain employees and directors pursuant to
the 2007 Stock Option Plan ("the Plan"), which has been approved by the stockholders. Options to purchase common stock
are granted by the Compensation Committee of the Board of Directors. The Plan allows for a maximum of 270,000 shares of common
stock to be issued. As of December 31, 2016, 269,500 shares have been issued.
On
May 26, 2011, the stockholders of the Company approved the Company's 2011 Stock Compensation Plan (the "Stock Plan").
The Plan allows for a maximum of 404,607 shares of common stock to be issued. On August 26, 2015, the stockholders of the
Company approved an amendment to the Company's 2011 Stock Compensation Plan to authorize an additional 350,000 shares for
issuance under the plan. The Company has issued 754,545 shares under the 2011 Stock Compensation Plan as of December 31,
2016.
Under
the Stock Option Plans, options are granted with an exercise price equal to the fair value of the Company's stock at the
date of the grant. Options granted vest on five annual installments (20% per annum) and have ten year contractual terms. All options
provide for accelerated vesting upon a change in control (as defined in the Plan). Stock options exercised result in the issuance
of new shares.
The
fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model
that uses the assumptions noted in the table below. Expected volatilities are based on peer volatility. The Company uses peer
data to estimate option exercise and post-vesting termination behavior. The expected term of options granted is based on peer
data and represents the period of time that options granted are expected to be outstanding, which takes into account that the
options are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury
yield curve in effect at the time of the grant.
The
fair value of options granted was determined using the following weighted-average assumptions as of grant date.
2016
2015
Risk-Free Interest Rate
1.44
%
1.88
%
Expected Term
84 months
84 months
Expected Stock Price Volatility
24.1
%
19.9
%
Dividend Yield
0.0
%
0.0
%
The
weighted average fair value of options granted was $3.61 and $3.27 in 2016 and 2015.
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FINANCIAL HOLDINGS, INC
.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
December 31,
2016 and 2015
(Dollars
in thousands, except per share data)
NOTE 9 — Share-Based
Payment Plans
(Continued)
The
following table presents a summary of the activity related to options as of December 31, 2016:
Weighted
Weighted
Average
Average
Remaining
Exercise
Contractual
Options
Price
Life (Years)
December 31, 2016
Outstanding at beginning of year
690,545
$
11.95
Granted
333,500
12.50
Exercised
-
-
Forfeited
-
-
Outstanding at year end
1,024,045
$
12.13
7.33
Vested or expected to vest
1,024,045
$
12.13
7.33
Exercisable at year end
333,201
$
11.35
3.62
The Company
recognized compensation expense related to options of $388 and $138 for the years ended December 31, 2016 and 2015, respectively.
At December 31, 2016, unrecognized compensation cost related to non-vested options was approximately $2,200 and is expected
to be recognized over a weighted average period of 4.08 years. The intrinsic value for outstanding, vested or expected to vest,
and exercisable options at December 31, 2016, was approximately $400 for all three categories.
NOTE 10 — Earnings
per Common Share
The
two-class method is used in the calculation of basic and diluted earnings per share. Under the two-class method, earnings available
to common shareholders for the period are allocated between common shareholders and participating securities according to participation
rights in undistributed earnings. The factors used in earnings per share computation follow:
2016
2015
Basic
Net income available to common shareholders
$
2,822
$
1,172
Less: Earnings allocated to participating
    securities
62
40
Net income allocated to common shareholders
2,760
1,132
Weighted average common shares outstanding
4,958,655
4,460,098
Basic earnings per common share
$
0.56
$
0.25
Diluted
Net income allocated to common shareholders for basic earnings
    per share
$
2,760
$
1,132
Weighted average shares outstanding for basic earnings per common
    share
4,958,655
4,460,098
Add: Dilutive effects of assumed exercises
    of stock options
30,550
30,550
Average shares and dilutive potential common
    shares
4,989,205
4,490,648
Diluted earnings per common share
$
0.55
$
0.25
Stock
options totaling 837,170 and 537,795 shares of common stock were not considered in computing diluted earnings per common share
for 2016 and 2015 because they were anti-dilutive.
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ESQUIRE
FINANCIAL HOLDINGS, INC
.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
December 31,
2016 and 2015
(Dollars
in thousands, except per share data)
NOTE 11 — Commitments
and Contingent Liabilities
Change-In-Control
Arrangements
Certain
key executive officers have arrangements that provide for the payment of a multiple of base salary, should a change-in control,
as defined, occur. These payments are limited under guidelines for deductibility pursuant to the Internal Revenue Code.
Credit
Related Commitments
The
Company provides the following types of off-balance sheet financial products to customers:
Commitments
to extend credit are agreements to lend to customers in accordance with contractual provisions. These commitments usually have
fixed expiration dates or other termination clauses and may require the payment of a fee. Total commitments outstanding do not
necessarily represent future cash flow requirements, since many commitments expire without being funded.
Each
customer's creditworthiness is evaluated prior to issuing these commitments and may require the customer to pledge certain
collateral (i.e., inventory, income-producing property) prior to the extension of credit. Fixed rate commitments are subject to
interest rate risk based on changes in prevailing rates during the commitment period. The Company is subject to credit risk in
the event that the commitments are drawn upon and the customer is unable to repay the obligation.
Letters
of credit are irrevocable commitments issued at the request of customers. They authorize the beneficiary to draw drafts for payment
in accordance with the stated terms and conditions. Letters of credit substitute the Company's creditworthiness for that
of the customer and are issued for a fee commensurate with the risk.
The
Company can issue two types of letters of credit: Commercial (documentary) Letters of Credit and Standby Letters of Credit. Commercial
Letters of Credit are commonly issued to finance the purchase of goods and are typically short term in nature. Standby Letters
of Credit are issued to back financial or performance obligations of a Bank customer, and are typically issued for periods up
to one year. Due to their long-term nature, standby letters of credit require adequate collateral in the form of cash or other
liquid assets. In most instances, standby letters of credit expire without being drawn upon.
The
credit risk involved in issuing letters of credit is essentially the same as extending credit facilities to comparable customers.
The
Company had $1,316 and $1,759 of fixed rate commitments to extend credit at December 31, 2016 and 2015, respectively. The
Company had $730 and $769 of variable rate commitments to extend credit at December 31, 2016 and 2015. As of December 31,
2016 and 2015, the Company had standby letters of credit totaling $1,259.
Lease
Commitments
At
December 31, 2016, the Company was obligated under several non-cancelable leases for certain premises and equipment. The
minimum annual rental commitments, exclusive of taxes and other charges, under non-cancelable lease agreements for premises at
December 31, 2016, are summarized as follows:
Minimum
Rentals
2017
$
489
2018
397
2019
399
2020
409
2021
419
Thereafter
2,222
Total lease commitments
$
4,335
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Table of Contents
ESQUIRE
FINANCIAL HOLDINGS, INC
.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
December 31,
2016 and 2015
(Dollars
in thousands, except per share data)
NOTE 11 — Commitments
and Contingent Liabilities
(Continued)
These
leases contain periodic escalation clauses and all expiring leases are evaluated for extensions at renewal. Rent expense for the
years ended December 31, 2016 and 2015, amounted to $573 and $531, respectively.
Litigation
The
Company and its subsidiary are subject to certain pending and threatened legal actions that arise out of the normal course of
business. In the opinion of management at the present time, the resolution of any pending or threatened litigation will not have
a material adverse effect on its consolidated financial statements.
NOTE 12 — Stockholders'
Equity
Sale
of Common and Preferred Stock
In
2014, the Company, through various offerings during the year, sold an additional 583,967 shares of common stock, with total proceeds,
net of offering costs, of approximately $6,800. The net proceeds were used to support the Company's continued growth and
for general corporate purposes .
On
December 23, 2014, an investor executed the purchase of 157,985 shares of 0.00% Series B Non-Voting Preferred Shares at a price
of $12.50 per share for proceeds, net of offering costs, of approximately $1,800. The preferred stock does not have a maturity
date and is not convertible by the holder, but is convertible on a one for one basis into shares of common stock by us under certain
circumstances. In addition, the preferred stock does not have a liquidation preference. Preferred shares have equal rights to
receive dividends when dividends are declared on common stock, and thus are considered participating securities.
During
2015, the Company sold 823,460 shares of common stock for a total of $9,800. The net proceeds were used to support the Company's
continued growth and for general corporate purposes.
In
June 2016, the Company and the preferred shareholder agreed to perform an exchange of 91,000 shares of 0.00% of Series B Non-Voting
Preferred Shares for 91,000 voting common shares, par value $0.01.
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).
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Table of Contents
ESQUIRE
FINANCIAL HOLDINGS, INC
.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
December 31,
2016 and 2015
(Dollars
in thousands, except per share data)
NOTE 13 — Fair
Value Measurements
(Continued)
Assets
and liabilities measured at fair value on a recurring basis are summarized below:
Fair Value
    Measurements Using
Quoted Prices
Significant
In Active
Other
Significant
Markets For
Observable
Unobservable
Identical Assets
Inputs
Inputs
(Level 1)
(Level 2)
(Level 3)
December 31, 2016
Assets
Available-for-sale securities
Mortgage-backed securities -
    agency
$
-
$
16,012
$
-
CMO's - agency
-
76,633
-
Total
$
-
$
92,645
$
-
December 31, 2015
Assets
Available-for-sale securities
Government agency debentures
$
-
$
4,001
$
-
Mortgage-backed securities - agency
-
17,147
-
CMO's - agency
-
63,091
-
Total
$
-
$
84,239
$
-
There
were no transfers between Level 1 and Level 2 during the year. There were no assets measured on a non-recurring basis as of December
31, 2016 and 2015.
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:
Cash
and Due from Banks and Interest Earning Deposits
: Carrying amounts approximate fair value, since these instruments are either
payable on demand or have short-term maturities. Cash on hand and non-interest due from bank accounts are Level 1 and interest
bearing deposits are Level 2.
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Table of Contents
ESQUIRE
FINANCIAL HOLDINGS, INC
.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
December 31,
2016 and 2015
(Dollars
in thousands, except per share data)
NOTE 13 — Fair
Value Measurements
(Continued)
Securities
Available-for-Sale
: The fair values for securities available-for-sale are determined by quoted market prices, 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 (Level 2 inputs).
Securities,
Restricted
: It is not practical to determine the fair value of FHLB and FRB stock due to restrictions placed on its transferability.
Loans
:
The estimated fair values of real estate mortgage loans and other loans receivable are based on discounted cash flow
calculations that use available market benchmarks when establishing discount factors for the types of loans resulting in a
Level 3 classification. Exceptions may be made for adjustable rate loans (with resets of one year or less), which would be
discounted straight to their rate index plus or minus an appropriate spread. All nonaccrual loans are carried at their
current fair value, if applicable. The method utilized to determine fair value does not represent exit price.
Accrued
Interest Receivable and Payable
: For these short-term instruments, the carrying amount is a reasonable estimate of the fair
value resulting in a Level 2 or 3 classification.
Deposits
:
The estimated fair value of certificates of deposits are based on discounted cash flow calculations that use a replacement cost
of funds approach to establishing discount rates for certificates of deposits maturities resulting in a Level 2 classification.
Stated value is fair value for all other deposits resulting in a Level 1 classification.
Secured
Borrowings
: Borrowings represent secured borrowings and carrying value is a reasonable estimate of fair value resulting in
a Level 2 classification.
Off-Balance-Sheet
Liabilities
: The fair value of off-balance-sheet commitments to extend credit is estimated using fees currently charged to
enter into similar agreements. The fair value is immaterial as of December 31, 2016 and 2015.
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Table of Contents
ESQUIRE
FINANCIAL HOLDINGS, INC
.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
December 31,
2016 and 2015
(Dollars
in thousands, except per share data)
NOTE 13 — Fair
Value Measurements
(Continued)
The
following table presents the carrying amounts and fair values of the Company's financial instruments:
Fair Value Measurement
    at
Carrying
December
    31, 2016, Using:
Value
(Level
    1)
(Level
    2)
(Level
    3)
Total
Financial Assets:
Cash and due from banks
$
437
$
437
$
-
$
-
$
437
Interest earning deposits
42,556
-
42,556
-
42,556
Securities available-for-sale
92,645
-
92,645
-
92,645
Securities, restricted
1,649
N/A
N/A
N/A
N/A
Loans, net of allowance
275,165
-
-
277,620
277,620
Accrued interest receivable
1,541
-
201
1,340
1,541
Financial Liabilities:
Certificates of deposit
23,955
-
23,930
-
23,930
Demand and other deposits
346,833
346,833
-
-
346,833
Secured borrowings
371
-
371
-
371
Accrued interest payable
3
-
3
-
3
Fair Value Measurement
    at
Carrying
December
    31, 2015, Using:
Value
(Level
    1)
(Level
    2)
(Level
    3)
Total
Financial Assets:
Cash and due from banks
$
450
$
450
$
-
$
-
$
450
Interest earning deposits
32,704
-
32,704
-
32,704
Securities available-for-sale
84,239
-
84,239
-
84,239
Securities, restricted
1,430
N/A
N/A
N/A
N/A
Loans, net of allowance
221,720
-
-
224,715
224,715
Accrued interest receivable
1,418
-
205
1,213
1,418
Financial Liabilities:
Certificates of deposit
9,900
-
9,881
-
9,881
Demand and other deposits
291,787
291,787
-
-
291,787
Secured borrowings
381
-
381
-
381
Accrued interest payable
-
-
-
-
-
NOTE 14 — Capital
Banks
are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and additionally
for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities and certain off-balance
sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative
judgments by regulators. Failure to meet capital requirements can initiate regulatory action. The final rules of implementing
the Basel Committee on Banking Supervision's capital guidelines for U.S. Banks (Basel III rules) became effective for the
Company on January 1, 2015, with full compliance with all of the requirements being phased in over a multi-year schedule, and
fully phased in by January 1, 2019. The net unrealized gain or loss on available for sale securities is not included in computing
regulatory capital. Management believes as of December 31, 2016, the Bank met all capital adequacy requirements to which it is
subject.
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Table of Contents
ESQUIRE
FINANCIAL HOLDINGS, INC
.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
December 31,
2016 and 2015
(Dollars
in thousands, except per share data)
NOTE 14 — Capital
(Continued
)
Prompt
corrective action regulations provide five classifications: well capitalized, adequately capitalized. Undercapitalized, significantly
undercapitalized and critically undercapitalized, although these terms are not used to represent overall financial condition.
If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions
are limited, as is asset growth and expansion, and capital restoration plans are required.
As
of December 31, 2016, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as "well
capitalized" under the regulatory framework for prompt corrective action. To be categorized as "well capitalized,"
the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table below.
Since that notification, there are no conditions or events that management believes have changed the institution's category.
For Capital
To be Well
Required
Adequacy Purposes
Capitalized Under
For Capital
Including Capital
Prompt Corrective
Actual
Adequacy
    Purposes*
Conservation
    Buffer(1)
Action Regulations*
Amount
Ratio
Amount
Ratio
Amount
Ratio
Amount
Ratio
December
    31, 2016
Total capital
     to risk weighted assets
$
50,974
17.25
%
$
23,642
8.00
%
$
25,489
8.63
%
$
29,552
10.00
%
Tier 1 (core) capital
    to risk weighted assets
47,560
16.09
17,731
6.00
19,578
6.63
23,642
8.00
Tier 1 (common) capital
to risk weighted assets
47,560
16.09
13,299
4.50
15,146
5.13
19,209
6.50
Tier 1 (core) capital
    to adjusted total assets
47,560
11.63
16,351
4.00
16,351
4.00
20,439
5.00
December
    31, 2015
Total capital to risk
    weighted assets
$
41,425
17.06
%
$
19,426
8.00
%
n/a
n/a
$
24,282
10.00
%
Tier 1 (core) capital
    to risk weighted assets
38,626
15.91
14,567
6.00
n/a
n/a
19,422
8.00
Tier 1 (common) capital
     to risk weighted assets
38,626
15.91
10,925
4.50
n/a
n/a
15,781
6.50
Tier 1 (core) capital
    to adjusted total assets
38,626
11.90
12,984
4.00
n/a
n/a
16,229
5.00
*
BASEL III revised the capital adequacy requirements and the Prompt Corrective Action Framework
effective January 1, 2015 for the Bank.
(1)
When fully phased in on January 1, 2019, the Basel Rules will require the Bank to maintain a 2.5% "capital conservation
buffer" on top of the minimum risk-weighted asset ratios. The capital conservation buffer is designed to absorb losses during
periods of economic stress. Banking institutions with a (i) Common Equity Tier 1 capital to risk-weighted assets, (ii)Tier 1 capital
to risk-weighted assets or (iii) total capital to risk-weighted assets above the respective minimum but below the capital conservation
buffer will face constraints on dividends, equity repurchases and discretionary bonus payments to executive officers based on
the amount of the shortfall. The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level
and will increase by 0.625% on each subsequent January 1, until it reaches 2.5% on January 1, 2019.
In
December 2012, the Board of Directors of the Bank ratified maintaining Tier I Leverage Capital at least equal to 9%, Tier I Risk-Based
Capital at least equal to 11% and Total Risk-Based Capital at least equal to 13%.
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Table of Contents
ESQUIRE
FINANCIAL HOLDINGS, INC
.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
December 31,
2016 and 2015
(Dollars
in thousands, except per share data)
NOTE 15 — Parent
Company Only Condensed Financial Information
Condensed
financial information of Esquire Financial Holdings, Inc. follows:
CONDENSED STATEMENTS
OF FINANCIAL CONDITION
At December
    31,
2016
2015
ASSETS
Cash and cash equivalents
$
4,473
$
7,459
Investment in banking subsidiary
47,085
40,393
Other assets
660
1,710
Total assets
$
52,218
$
49,562
LIABILITIES
Due to subsidiary
$
-
$
90
Other liabilities
32
47
Total liabilities
32
137
Stockholders' equity
Preferred stock
1
2
Common stock
50
49
Additional paid-in-capital
58,845
58,456
Retained deficit
(5,826
)
(8,648
)
Other comprehensive loss
(884
)
(434
)
Total stockholders' equity
52,186
49,425
Total liabilities and equity
$
52,218
$
49,562
CONDENSED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For the Years Ended December 31,
2016
2015
Interest income
$
100
$
-
Other expense
(620
)
(540
)
Loss before income tax and undistributed subsidiary income
(520
)
(540
)
Income tax benefit
(200
)
(213
)
Equity in undistributed subsidiary income
3,142
1,499
Net income
$
2,822
$
1,172
Comprehensive income
$
2,372
$
988
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ESQUIRE
FINANCIAL HOLDINGS, INC
.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
December 31,
2016 and 2015
(Dollars
in thousands, except per share data)
NOTE 15 — Parent
Company Only Condensed Financial Information
(Continued)
CONDENSED STATEMENTS
OF CASH FLOWS
For the Years Ended December 31,
2016
2015
Cash flows from operating activities
Net income
$
2,822
$
1,172
Adjustments:
Stock options expense
388
138
Equity in undistributed subsidiary income
(3,142
)
(1,499
)
Change in other assets
(200
)
(213
)
Change in other liabilities
(105
)
(438
)
Net cash used in operating activities
(237
)
(840
)
Cash flows from investing activities
Investments in subsidiaries
(4,000
)
(3,000
)
Other assets
1,250
(1,250
)
Net cash used in investing activities
(2,750
)
(4,250
)
Cash flows from financing activities
Proceeds from the issuance of common stock
1
9,757
Net cash from financing activities
1
9,757
Net change in cash and cash equivalents
(2,986
)
4,667
Beginning cash and cash equivalents
7,459
2,792
Ending cash and cash equivalents
$
4,473
$
7,459
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ESQUIRE
FINANCIAL HOLDINGS, INC
.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
December 31,
2016 and 2015
(Dollars
in thousands, except per share data)
NOTE 16 — Accumulated
Other Comprehensive Loss
The
following is changes in accumulated other comprehensive loss by component, net of tax, for the years ending December 31, 2016
and 2015:
2016
2015
Unrealized Losses on
Unrealized Losses on
Year Ended December
    31,
Available
    for Sale Securities
Available
    for Sale Securities
Beginning balance
$
(434
)
$
(250
)
Other comprehensive loss before reclassifications
(454
)
(184
)
Amounts reclassified from accumulated other comprehensive income
4
-
Net current period other comprehensive loss
(450
)
(184
)
Ending balance
$
(884
)
$
(434
)
The
following represents the reclassifications out of accumulated other comprehensive income for the years ended December 31, 2016,
and 2015:
Twelve months ended
December 31,
Affected Line in the
2016
2015
Consolidated
    Statement of Income
Realized gain on securities sales, AFS
$
6
$
-
Net gains on securities available-for-sale
Income tax expense
(2
)
-
Income tax expense
Total reclassifications, net of tax
$
4
$
-
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Table of Contents
Until           ,
2017, all dealers that buy, sell or trade our common stock, whether or not participating in this offering, may be required to deliver
a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriter and with
respect to their unsold allotments or subscriptions.
[
·
]
Shares
COMMON STOCK
PROSPECTUS
[
·
]
,
2017
Neither we nor the underwriter has authorized anyone to provide
information different from that contained in this prospectus. When you make a decision about whether to invest in our common stock,
you should not rely upon any information other than the information in this prospectus. Neither the delivery of this prospectus
nor the sale of our common stock means that information contained in this prospectus is correct after the date of this prospectus.
This prospectus is not an offer to sell or solicitation of an offer to buy these shares of common stock in any circumstances under
which the offer or solicitation is unlawful.
Table of Contents
PART II:
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13.
Other Expenses of Issuance and Distribution
The following table sets forth
all costs and expenses, other than underwriting discounts and commissions, in connection with the sale of shares of our common
stock being registered, all of which will be paid by us. All amounts shown are estimates, except for the SEC registration fee,
the FINRA filing fee and the NASDAQ listing fee.
SEC registration fee
$
*
FINRA filing fee
*
Listing fees
*
Records Management Fees and Expenses
*
Printing fees and expenses
*
Legal and accounting fees and expenses
*
Transfer agent's fees
*
Miscellaneous
*
Total
$
*
*
To be filed by amendment.
Item 14.
Indemnification of Directors and Officers
Articles 10 and 11 of the
Articles of Incorporation of Esquire Financial Holdings, Inc. (the "Corporation") set forth circumstances under which
directors, officers, employees and agents of the Corporation may be insured or indemnified against liability which they incur in
their capacities as such:
ARTICLE 10. Indemnification,
etc. of Directors and Officers.
A.          Indemnification.
The Corporation shall indemnify (1) its current and former directors and officers, whether serving the Corporation or at its
request any other entity, to the fullest extent required or permitted by the MGCL now or hereafter in force, including the advancement
of expenses under the procedures and to the fullest extent permitted by law, and (2) other employees and agents to such extent
as shall be authorized by the Board of Directors and permitted by law; provided, however, that, except as provided in Section B
hereof with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized
by the Board of Directors of the Corporation. The right to indemnification conferred in Section A of this Article 10 shall include
the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition
(hereinafter an "advancement of expenses"); provided, however, that if the MGCL requires an advancement of expenses
incurred by an indemnitee in his or her capacity as a director or officers (and not in any other capacity in which service was
or is rended by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery
to the Corporation of a written undertaking (hereinafter an "undertaking"), by or on behalf of such indemnitee, to
repay all amounts so advanced if it shall ultimately be determined by a final judicial decision from which there is no further
right to appeal that such indemnitee is not entitled to be indemnified for such expenses under Section A of this Article 10 or
otherwise.
B.          Procedure.
If
a claim under Section A of this Article 10 is not paid in full by the Corporation within 60 days after a written claim
has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable
period shall be 20 days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement
of expenses pursuant to the terms of an undertaking, the indemnitee shall also be entitled to be reimbursed the expense of prosecuting
or defending such suit. It shall be a defense to any action for advancement of expenses that the Corporation has not received both
(i) an undertaking as required by law to repay such advances in the event it shall ultimately be determined that the standard of
conduct has not been met and (ii) a written affirmation by the indemnitee of his good
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faith belief that the standard
of conduct necessary for indemnification by the Corporation has been met. In (i) any suit brought by the indemnitee to enforce
a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses)
it shall be a defense that, and (ii) any suit by the Corporation to recover an advancement of expenses pursuant to the terms
of an undertaking the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has
not met the applicable standard for indemnification set forth in the MGCL. Neither the failure of the Corporation (including its
Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard
of conduct set forth in the MGCL, nor an actual determination by the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption
that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be
a defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses
hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving
that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article 10 or otherwise
shall be on the Corporation.
C.          Non-Exclusivity.
The rights to indemnification and to the advancement of expenses conferred in this Article 10 shall not be exclusive of
any other right which any Person may have or hereafter acquire under any statute, these Articles, the Corporation's Bylaws,
any agreement, any vote of stockholders or the Board of Directors, or otherwise.
D.          Insurance.
The
Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or
not the Corporation would have the power to indemnify such Person against such expense, liability or loss under the MGCL.
E.          Miscellaneous.
The Corporation shall not be liable for any payment under this Article 10 in connection with a claim made by any indemnitee
to the extent such indemnitee has otherwise actually received payment under any insurance policy, agreement, or otherwise, of the
amounts otherwise indemnifiable hereunder. The rights to indemnification and to the advancement of expenses conferred in Sections A
and B of this Article 10 shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be
a director or officer and shall inure to the benefit of the indemnitee's heirs, executors and administrators.
Any repeal or modification
of this Article 10 shall not in any way diminish any rights to indemnification or advancement of expenses of such director
or officer or the obligations of the Corporation arising hereunder with respect to events occurring, or claims made, while this
Article 11 is in force.
ARTICLE 11. Limitation
of Liability.
An officer or director of the Corporation, as such, shall not be liable to the Corporation or its stockholders
for money damages, except (A) to the extent that it is proved that the Person actually received an improper benefit or profit
in money, property or services for the amount of the benefit or profit in money, property or services actually received; (B) to
the extent that a judgment or other final adjudication adverse to the Person is entered in a proceeding based on a finding in the
proceeding that the Person's action, or failure to act, was the result of active and deliberate dishonesty and was material
to the cause of action adjudicated in the proceeding; or (C) to the extent otherwise provided by the MGCL. If the MGCL is
amended to further eliminate or limit the Personal liability of officers and directors, then the liability of officers and directors
of the Corporation shall be eliminated or limited to the fullest extent permitted by the MGCL, as so amended.
We have also obtained
officers' and directors' liability insurance which insures against liabilities that officers and directors may, in such capacities,
incur. Section 2-418 of the MGCL provides that a Maryland corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee, or agent of the Company, or who, while a director, officer, employee, or agent
of the Company, is or was serving at the request of the Company as a director, officer, partner, trustee, employee, or agent of
another foreign or domestic corporation, partnership, joint venture, trust, other enterprise, or employee benefit plan against
any liability
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Table of Contents
asserted against and incurred by such person
in any such capacity or arising out of such person's position, whether or not the Company would have the power to indemnify against
liability under the provisions of the section.
Reference is made
to the form of underwriting agreement to be filed as Exhibit 1.1 hereto for provisions providing that the underwriter is
obligated under certain circumstances to indemnify our directors, officers and controlling persons against certain liabilities
under the Securities Act of 1933, as amended (the "Securities Act").
Item 15.
Recent Sales of Unregistered Securities
The following sets forth
information regarding unregistered securities that were sold by the Company within the past three years.
(1)
In the past three years, we have granted 791,095 stock options pursuant to our 2007 Stock Option
Plan and our 2011 Stock Compensation Plan to our employees and directors. No underwriter or placement agent was involved in the
issuance or sale of any of these securities, and no underwriting discounts or commissions were paid. The issuance and sale of the
securities described above were made in reliance upon exemptions from registration requirements under Section 4(a)(2) of the Securities
Act and pursuant to Rule 701 promulgated under the Securities Act
as
a transaction by an issuer not involving any public offering
and pursuant to benefit
plans and contracts relating to compensation
.
(2)
Between November 2013 and June 2014, we issued an aggregate of 203,352 shares of common stock to
accredited investors, at a price of $12.50, for aggregate consideration of approximately $2.5 million. No underwriter or placement
agent was involved in the issuance or sale of any of these securities, and no underwriting discounts or commissions were paid.
The securities were issued under an exemption
from registration pursuant to Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder
as a transaction by an issuer not involving any public offering.
(3)
Between December 2014 and September 2015, we issued an aggregate of 1,221,075 shares of common
stock to accredited investors, at a price of $12.50, for aggregate consideration of approximately $15.2 million. Additionally,
o
n December 23, 2014, we issued 157,985 shares
of Series B Non
-Voting Preferred Stock
to
CJA Private Equity Financial Restructuring Master Fund I, LP
at a price of $12.50
per share, for aggregate
consideration of $2.0 million in a private placement transaction. The placement agent for these transactions was Sandler O'Neill &
Partners, L.P.
The aggregate
placement agent commission for these transactions was $611,000
.
The
securities were issued under an exemption from registration pursuant to Section 4(a)(2) of the Securities Act and Rule 506
of Regulation D promulgated thereunder as a transaction by an issuer not involving any public offering.
(4)
In June 2016, we issued 91,000 shares of common stock to CJA Private Equity Financial Restructuring
Master Fund I, LP in exchange for 91,000 shares of
Series
B Non
-Voting Preferred Stock. No underwriter or placement agent was involved in the issuance of these securities, and no
underwriting discounts or commissions were paid.
The
securities were issued under an exemption from registration pursuant to Section 4(a)(2) of the Securities Act as a transaction
by an issuer not involving any public offering.
Item 16.
Exhibits and Financial Statement Schedules:
The exhibits and financial
statement schedules filed as part of this registration statement are as follows:
(a)
List of Exhibits
Exhibit No.
Description
1.1
Form of Underwriting Agreement*
3.1
Articles of Incorporation of Esquire Financial Holdings, Inc.
3.2
Articles Supplementary of Series B Non-Voting Preferred Stock of Esquire Financial Holdings, Inc.
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Table of Contents
3.3
Bylaws of Esquire Financial Holdings, Inc.
4.1
Form of Common Stock Certificate of Esquire Financial Holdings, Inc.
4.2
Form of Series B Preferred Stock Certificate of Esquire Financial Holdings, Inc.
5
Form of opinion of Luse
    Gorman, PC regarding legality of securities being registered
10.1
Letter Agreement regarding Investor Rights, dated December 23, 2014, between Esquire Financial Holdings, Inc. and CJA Private Equity Financial Restructuring Master Fund I, LP
10.2
Registration Rights Agreement, dated December 23, 2014, between Esquire Financial Holdings, Inc. and CJA Private Equity Financial Restructuring Master Fund I, LP
10.3
Employment Agreement by and among Esquire Financial Holdings, Inc., Esquire Bank and Dennis Shields
10.4
Employment Agreement by and among Esquire Financial Holdings, Inc., Esquire Bank and Andrew C. Sagliocca
10.5
Employment Agreement by and among Esquire Financial Holdings, Inc., Esquire Bank and Eric Bader
10.6
Employment Agreement by and among Esquire Financial Holdings, Inc., Esquire Bank and Ari Kornhaber
10.7
Esquire Bank 2007 Stock Option Plan
10.8
Esquire Financial Holdings, Inc. 2011 Stock Compensation Plan, as amended
21
Subsidiaries of Esquire Financial Holdings, Inc.
23.1
Consent of Crowe Horwath LLP
23.2
Consent of Luse Gorman, PC (set forth in Exhibit 5)
24.1
Power of Attorney (set forth on the signature page to this Registration Statement)
*
To be filed by amendment.
(b)
Financial Statement Schedules
No financial statement
schedules are filed because the required information is not applicable or is included in the consolidated financial statements
or related notes.
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Item 17.
Undertakings
The undersigned registrant
hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreement certificates in such denominations
and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.
Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant
pursuant to the indemnification provisions described herein, or otherwise, the registrant has been advised that in the opinion
of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issue.
The undersigned registrant
hereby undertakes that:
(1) For purposes of determining
any liability under the Securities Act, the information omitted from the form of prospectus as filed as part of this registration
statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared
effective.
(2) For the purpose of
determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
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Table of Contents
SIGNATURES
Pursuant to the requirements
of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized in the City of Garden City, State of New York on May 31, 2017.
ESQUIRE FINANCIAL HOLDINGS, INC.
By:
/s/ Andrew C. Sagliocca
Andrew C. Sagliocca
President and Chief Executive Officer
(Duly Authorized Representative)
POWER OF ATTORNEY
We, the undersigned directors
of Esquire Financial Holdings, Inc. (the "Company"), severally constitute and appoint Andrew C. Sagliocca and Eric
S. Bader with full power of substitution, our true and lawful attorney and agent, to do any and all things and acts in our names
in the capacities indicated below which said Andrew C. Sagliocca and Eric S. Bader may deem necessary or advisable to enable the
Company to comply with the Securities Act of 1933, and any rules, regulations and requirements of the Securities and Exchange Commission,
in connection with the registration statement on Form S-1 relating to the offering of the Company common stock, including specifically,
but not limited to, power and authority to sign for us or any of us in our names in the capacities indicated below the registration
statement and any and all amendments (including post-effective amendments) thereto; and we hereby approve, ratify and confirm all
that said Andrew C. Sagliocca and Eric S. Bader shall do or cause to be done by virtue hereof.
Pursuant to the requirements
of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the
dates indicated.
Signatures
Title
Date
/s/ Andrew C. Sagliocca
President and Chief Executive Officer
May 31, 2017
Andrew C. Sagliocca
and Director (Principal Executive Officer)
/s/ Eric S. Bader
Executive Vice President, Chief Financial
May 31, 2017
Eric S. Bader
Officer and Treasurer (Principal Financial
and Accounting Officer)
/s/ Dennis Shields
Executive Chairman
May 31, 2017
Dennis Shields
/s/ Anthony Coelho
Director
May 31, 2017
Anthony Coelho
/s/ Todd Deutsch
Director
May 31, 2017
Todd Deutsch
/s/ Marc D. Grossman
Director
May 31, 2017
Marc D. Grossman
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/s/ Russ M. Herman
Director
May 31, 2017
Russ M. Herman
/s/ Janet Hill
Director
May 31, 2017
Janet Hill
/s/ Robert J. Mitzman
Director
May 31, 2017
Robert J. Mitzman
/s/ John Morgan
Director
May 31, 2017
John Morgan
/s/ Richard T. Powers
Director
May 31, 2017
Richard T. Powers
/s/ Jack Thompson
Director
May 31, 2017
Jack Thompson
/s/ Kevin C. Waterhouse
Director
May 31, 2017
Kevin C. Waterhouse
/s/ Selig Zises
Director
May 31, 2017
Selig Zises
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Table of Contents
EXHIBIT INDEX
Exhibit No.
Description
1.1
Form of Underwriting Agreement*
3.1
Articles of Incorporation of Esquire Financial Holdings, Inc.
3.2
Articles Supplementary of Series B Non-Voting Preferred Stock of Esquire Financial Holdings, Inc.
3.3
Bylaws of Esquire Financial Holdings, Inc.
4.1
Form of Common Stock Certificate of Esquire Financial Holdings, Inc.
4.2
Form of Series B Preferred Stock Certificate of Esquire Financial Holdings, Inc.
5
Form of o
pinion of
    Luse     Gorman, PC regarding legality of securities being registered
10.1
Letter Agreement regarding Investor Rights, dated December 23, 2014, between Esquire Financial Holdings, Inc. and CJA Private Equity Financial Restructuring Master Fund I, LP
10.2
Registration Rights Agreement, dated December 23, 2014, between Esquire Financial Holdings, Inc. and CJA Private Equity Financial Restructuring Master Fund I, LP
10.3
Employment Agreement by and among Esquire Financial Holdings, Inc., Esquire Bank and Dennis Shields
10.4
Employment Agreement by and among Esquire Financial Holdings, Inc., Esquire Bank and Andrew C. Sagliocca
10.5
Employment Agreement by and among Esquire Financial Holdings, Inc., Esquire Bank and Eric Bader
10.6
Employment Agreement by and among Esquire Financial Holdings, Inc., Esquire Bank and Ari Kornhaber
10.7
Esquire Bank 2007 Stock Option Plan
10.8
Esquire Financial Holdings, Inc. 2011 Stock Compensation Plan, as amended
21
Subsidiaries of Esquire Financial Holdings, Inc.
23.1
Consent of Crowe Horwath LLP
23.2
Consent of Luse Gorman, PC (set forth in Exhibit 5)
24.1
Power of Attorney (set forth on the signature page to this Registration Statement)
*
To be filed by amendment.
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8