Esquire Financial Holdings, Inc. Aktie

Hello, everyone. Thank you for joining us, and welcome to the Esquire Financial Holdings Q2 2026 Earnings Release Conference Call. [Operator Instructions]

I will now hand the conference over to Andrew Sagliocca, CEO, Vice Chairman and President. Andrew, please go ahead.

Thank you, Paige. I wanted to let everyone know on the call that I'm joined in the room with Michael Lacapria, our SVP and Chief Financial Officer; as well as Eric Bader, our EVP and Chief Operating Officer.

I'd like to start by thanking everybody, and welcome, everybody, to the investor call, including our current investors, analysts, Board members and employees as well as our business partners and Signature stakeholders, including their Board, employees and investors, too.

As Paige indicated, I'm going to kick off this call with some high-level thoughts and comments, then turn it over to Michael for a financial update, and then we can address any questions that any of the callers have.

As highlighted in the earnings release, the Signature merger is scheduled to close on August 1, 2026. The Chicago metro market represents one of the top 3 largest markets in the country, including New York City and Los Angeles, for both population and contingent fee law firms, which is our primary focus or vertical. As we previously noted, we believe the Signature merger will accelerate growth in the Chicago and Midwest markets in the future, where Esquire on a stand-alone basis currently underserves this very robust metro area. This is primarily because Signature has a well-established and well-known Chicago-based management team and brands. And if we couple this with Esquire's deep understanding of this extremely large, complex and fragmented national litigation vertical, which is approximately $0.5 trillion a year in settlements, we believe the combined company with its strong brand culture and foundation will drive sustained growth, industry-leading performance metrics and industry-leading returns in the future.

With that said, I'll turn it over to Michael to give you a financial update for the second quarter. Michael?

Thank you, Andrew. To those joining us on the call, I will provide a brief overview of our second quarter financial results as highlighted in our earnings release and investor presentation published earlier this morning.

For the current quarter, we printed GAAP net income of $13 million or $1.49 per diluted share. These results included approximately $1.1 million of pretax merger-related expenses associated with our acquisition of Signature Bank Corporation. Excluding these expenses, adjusted net income totaled $14 million or $1.60 per diluted share. Adjusted earnings increased 16% as compared to the prior year quarter, demonstrating continued strength across our business as we also continue to invest in our platform.

Our average returns on assets and average equity were 2.09% and 17.06%, respectively. Excluding merger-related expenses, adjusted returns on average assets and equity were 2.25% and 18.33%, respectively. These results reflect the pace of our profitable growth and our operational efficiencies. Our net interest margin remained resilient at 596 basis points. That's despite the significant decline in short-term interest rates from peak levels experienced over the past several years. Further, our margin was negatively impacted by approximately 10 basis points due to elevated interest-earning cash balances funded by our core deposit franchise.

Loan growth remained exceptionally strong. On a linked-quarter basis, total loans increased $87.2 million or 19% annualized, reaching $1.9 billion, while experiencing $76.1 million in loan payoffs during the quarter. This growth was driven by commercial loan and real estate loan production of $61.6 million and $25.6 million, respectively. As it relates to our litigation loan portfolio, we saw $72.6 million or 24% annualized net growth, bringing our litigation book to $1.29 billion at a blended yield of 8.8%. This translates to 41% loan growth year-over-year. It is important to also note that client activity levels and production pipelines remain healthy as we enter the second half of the year. Despite -- deposit loan growth was equally strong. Total deposits increased $77.1 million on a linked-quarter basis or 15% annualized, reaching $2.18 billion.

Our cost of funds remained relatively flat at 1.03% as we effectively -- as we continue to effectively manage our funding base. This growth was fueled by litigation-related escrow and IOLTA deposits, reflecting the continued success of our relationship-focused commercial banking strategy. Off-balance sheet sweep balances totaled $1 billion with approximately 38% of that available for liquidity purposes if needed. Administrative service payment fee income on these balances totaled $1.1 million for the quarter. Total liquidity, including both cash and borrowing capacity, was $1.2 billion as of quarter end.

Credit quality remains solid. Our allowance for credit losses remained at 1.3% of total loans, consistent with the prior quarter, and we have 2 nonperforming loans totaling $5.1 million, representing 20 basis points on total assets. During the quarter, we transferred a previously criticized multifamily credit to nonaccrual status and recognized a $1.6 million charge-off. Importantly, we have no additional exposures to that real estate sponsor, no other real estate credits assessed as special mention or substandard, no exposure to commercial office and limited exposure to hospitality at $13.17 million. As far as our litigation loan portfolio is concerned, it's worth noting we have no current exposure assessed as special mention or substandard.

Noninterest income remained stable at $6.4 million, representing approximately 15% of total revenue. Our payments platform continues to be a meaningful contributor to earnings and client engagement. During the quarter, we supported 93,000 small business clients nationwide, processing approximately $10.6 billion in payment volume across 153 million transactions. Operational expenses continue to reflect disciplined investment in future growth. Total noninterest expense was $21.1 million, including merger-related costs associated with the pending Signature acquisition. Excluding these expenses, our adjusted efficiency ratio was 47.6%, reflecting continued operating leverage while we invest in technology, business development, risk management and client service initiatives. Our capital foundation also remains strong. At quarter end, consolidated equity to assets and the bank level Tier 1 capital ratios were approximately 12.5% and 14.2%, respectively. This is positioning us well above regulatory well-capitalized standards and provides us substantial flexibility as we approach the closing of the Signature transaction.

With that, I'll turn it back over to Andrew for his additional comments.

Thank you, Michael. Now that was very thorough. I'm going to turn it back over to Paige for any questions that our guests on the call have.

[Operator Instructions] Your first question comes from the line of Steve Moss with Raymond James.

This is Chase, on for Steve. So litigation growth was strong as per usual, but the strong CRE growth in the mix as well this quarter. How do you think about that mix going forward as well?

As we've talked about in the past, our focus is on national growth in the litigation platform. The CRE growth, I think, was only about $25 million for the quarter. So I guess that's strong for us. It's a small number for us. There's opportunities in the market, which is a very large CRE multifamily market out there. But our focus very simply is our national litigation platform. That's primary. That is an overall higher-yielding blend and also brings core funding to the bank, not only for loan growth, but it funds the entire balance sheet for asset growth. So we are looking -- always looking in the CRE market for opportunities that meet our criteria. We're looking for strong debt service coverage and strong loan to values. And if we have to sacrifice some yield to get those, we will, since our litigation portfolio bolsters our overall net interest margin.

Got it. Appreciate that color there. And where are new litigation loans coming on at these days? How are those yields holding up?

Yields are holding up strong. We're -- if you look at past quarters, we were closer to the 9% than where we are today at 8.80%. But I know we, I and my executive group and senior management group focus on our overall margin. If we can manage the margin prior to Signature, which will change the complexion of the margin, as I think we all understand, we can manage the margin around 6%. I think that's a pretty good net interest margin and obviously generates really good returns. If we can manage that overall margin around 6%, I'm not worried about the individual loan composition that comprises that. We printed a 5.96% margin, but compared to a year ago, cash is about $50 million elevated. Compared to a quarter ago, it's about $30 million elevated. We only need about $100 million on average in cash to run our 2 national platforms. Most of that cash is for our payments platform. So in round numbers, we have about $100 million of excess cash sitting on the balance sheet to deploy in the loan portfolio. If we deploy even $50 million of that, our margin would have been 10 basis points higher or about 6.05%, 6.06%.

[Operator Instructions] Your next question comes from the line of Emily Lee with KBW.

This is Emily, stepping in for Tim. So with the Signature merger scheduled for August 1 close, and last quarter, you noted that the integration and reception has been outstanding. Can you just provide an update on how that process is going? And just remind us how quickly Signature's team can get up to speed on Esquire-style litigation lending and, you know, ramping up that volume?

Absolutely. So the process has gone extremely well. The cooperation and partnership has been outstanding. We've both been in each other's shops. Obviously, we, at Esquire, have been out to Chicago a lot more than they need to be here at this time. So there's been a lot of trips out there besides phone calls and team Zoom calls. At this point, I really have no concerns heading into the 8/1 date. The legal Day 1 integration and readiness is there. There are no concerns. And we've been working over the last 2 months with Mick and his team on the lending side and business development side to review how we view, approach and underwrite the litigation vertical or plaintiff law firms along with working with them on prospective clients within our CRM database and, for lack of a better phrase, cross-checking with them on who they know at those law firms.

And I think we're going to have a pretty good start to putting the companies together. We're not waiting to put the companies together, Emily, to have those discussions, not only about the litigation vertical and our business development approach and our underwriting, but probably more important than all of that, identifying key prospective law firms in the Chicago and Midwest market that we can focus on as a combined team.

That's great to hear. And then I guess shifting over to the payment side of things. Last quarter, you mentioned your intent to move towards more direct -- doing more direct business with merchants post-Signature and sort of moving away from that indirect ISO model. Is there any update on that push? And like how will that impact fees, I guess?

Sure. So for the time being, over the next year, if not 1.5 years, as you know, '26 is coming to a close quickly. So for the next 4 to 6 quarters, the merchant model is more of a battleship. The volume will grow somewhere around 10%. The only reason the volume is down year-over-year is 1 or 2 ISOs that we banked sold their platform to other ISOs in the market, which obviously impacts us if they're no longer with us. But barring that, the volume tends to grow at about 10%. The revenue tends to grow somewhere around 3% or 5%. That's on the indirect model on the merchant platform.

And yes, with the acquisition of Signature, we will focus on their non-litigation commercial customers in their market and hopefully be able to move them to a direct merchant acquiring platform with us. But once again, that's a slow and steady process. Nothing is going to turn on a dime. So I know where our friends at KBW have us in merchant processing fee income is still consistent with how we see it on our side.

All right, great. And then if I could squeeze in one more. Now that you're aiming towards a NIM around 6%, what factors would you anticipate bringing that below or above that range?

Yes. I mean our stand-alone NIM is going to hang around 6%, but we're not going to be stand-alone for much longer. We only have about 8 days until we're no longer stand-alone. And I think you know, Emily, that Signature in round numbers is about a $2 billion platform. So where we see the NIM going and we provided guidance to your firm and the other firms that cover us is right around, call it, 5.40%, 5.45% overall on a combined basis, Day 1. And I say Day 1 because, obviously, we are going to work as a combined company, and we are going to focus on those higher-yielding assets, specifically the litigation vertical in their market that brings low-cost core funding to the table. And as you know, math is math. So the more we elevate that concentration of a vertical like that over time, the better the margin is going to do over time. But we see it starting right in that 5.40%, 5.50% range overall, call it, 5.45% as the net interest margin Day 1, probably more reflective in a full quarter for December than in a partial quarter for September, and we take it from there.

Your next question comes from the line of Alan Strauss with Ithaca.

Yes. Just a quick question. Post merger, what happens to the interest rate sensitivity of the balance sheet?

It's -- believe it or not, Alan -- and thank you for the question. It's relatively unchanged. Eric Bader is here with me in the office. Eric, besides being COO and is -- also runs the treasury function. So maybe Eric can give you a little more color than me, but we've already simulated the model using, I believe, December and March on a pro forma combined basis. And if I know Eric well enough, and I do know him 25-plus years, I'm sure he's going to do the same with the June quarter year-end.

So Eric?

Yes. No, thank you. Andrew, you're correct. Alan, hope all's well. As Andrew indicated, we ran a couple of pro forma models of the combined institution through our systems, and there's really no significant change. They have a lot of floating-rate assets like we do. So we don't anticipate any significant changes to how the balance sheet is managed from an interest rate risk perspective at this time.

So we would assume that it's slightly asset-sensitive?

Yes.

Yes. You got it, Alan.

Yes, Alan, the best answer I can give you is you know we're going to give you in our Qs and in our investor deck, the models and simulation models that being a regulated entity have to conform to industry standards and regulatory standards so they can compare them across companies. The best answer I can give you is rates are down about 300 basis points since '23 and our margin has moved maybe 10 basis points, 15 basis points from a high watermark of about 6.15% to about 6%. And if you normalize the cash, which is significant and rates are down significantly on interest-earning cash or even Fed funds sold, we've been able to hang in around that 6% range for several years now, even though if you look back at our modeling assumptions in our Q back in '23 and '24, the impact should have been greater than what we -- what actually happened.

So the Signature team, which from an interest rate risk standpoint, will be managed, centralized under Eric going forward, have experienced the same kind of sensitivity. They're asset-sensitive. Their internal reports reflected that, but they've been able to do a good job managing their net interest margin too over time.

Okay. Great. Congrats on being one of the few asset sensitive -- slightly asset-sensitive banks in the country. Just one other question, just clarification. The debt service coverage that you wrote about for the multifamily portfolio, that is on current debt service coverage as of June 30 for the multifamily portfolio or at time of origination?

No. It's current, Alan. So we -- annually, for loans over a certain size, I believe, it's $3 million. So very small loans, we don't get annual updates. The bulk of our loans, as you can imagine, are above that amount. So annually, we get new rent rolls and new net operating statements from the sponsors, and we update those debt service coverage ratios currently. And those are what are in the model where we summarized it in the one bullet. So you are exactly right. It is current debt service coverage.

And I think more importantly, Alan, by looking out over the next year or 2 because we look at it by loan, not by groupings and portfolio, this one multifamily loan that we put on nonaccrual, we've been signaling to the market and telling our analysts for over a year. It's been in the Q that we have one other $6 million loan to the same sponsor that was special mention. So unfortunately, it went nonaccrual. I'm not shocked. I'm also not happy. But looking forward over the rest of this year, a year forward and 1 to 2 years forward, we are very comfortable with what's sitting in our multifamily portfolio also at this point.

Okay. Great. And the bank has become large enough so you can absorb the slight nicks anyway on this portfolio?

Yes. Yes. I mean, even at -- great point, Alan, even at $2.5 billion where we are now in round numbers, this $1.6 million charge-off, we still hit or exceeded earnings estimates even with this charge-off. So you're absolutely right with the amount of earnings and capital we generate just from earnings at a, call it, a 2.25% ROA or above really helps fortify and protect the overall balance sheet and portfolio. And to your point, absorbing what are smaller losses as we get bigger becomes more normalized than when we were $1.5 billion not too long ago.

There are no further questions at this time. I will now turn the call back to Andrew for closing remarks.

Excellent. Well, I want to thank everybody for joining us again. We, at Esquire, and the team, led by Mick over at Signature in Chicago, are really excited to get this deal closed next Saturday, on August 1. It's going to be a great business combination. And I believe the best is in front of us, not behind us. And we will continue to perform at the top of the market and both in growth and performance metrics and returns. So I look forward to speaking to everybody at quarter end, September and October. And quite honestly, I think the end of the year with the full quarter of December is going to be really exciting and a good telltale sign of how the combined entity is going to perform going forward.

So thank you, everybody, I appreciate your time today.

This concludes today's call. Thank you for attending. You may now disconnect.

Thank you for standing by, and welcome to the Special Meeting of Stockholders. [Operator Instructions]

I would now like to turn the call over to Andrew Sagliocca, Vice Chairman, Chief Executive Officer and President. Sir, please go ahead.

Thank you. Good morning, everybody. This is Andrew Sagliocca. I will serve as Chairman of the Special Meeting of Stockholders. It's my pleasure on behalf of the directors and officers of the company to extend to you a warm welcome and express our appreciation for attending this meeting. I'd like to welcome those over at Signature Bank, both the employees and the Board members that might be listening in. I'd like to welcome our management team and employees and our Board members that are listening in and the professionals, both on our side and Signature side that helped get the deal to fruition that I'm sure are on the line. So welcome, everybody, and our investors and analysts and guests.

The principal business of this meeting is to approve the issuance of Esquire common stock to the holders of Signature Bancorporation, Inc. common stock pursuant to the merger agreement with Signature. I'd like to let everybody know that in the room with me is our EVP and COO, Eric Bader; our Corporate Secretary and Chief Legal Officer, Gary Lax; who will act as Secretary for the special meeting; our CFO, Michael Lacapria; and also present is Joe Simon from Cullen and Dykman, who the Board appointed to act as judge of election at this special meeting and any adjournments and to count and examine all votes.

Mr. Lax, has the notice of this meeting been sent to all stockholders entitled to vote at the meeting?

Yes, Mr. Chairman, I have confirmation from Broadridge stating that notice has been mailed to each stockholder as required under the bylaws. The Board fixed April 29, 2026, as the record date for determining stockholders entitled to notice of and to vote at this special meeting. A copy of the notice, the confirmation of the mailing of notice and the excerpts from the Board meeting stating the date and time for this meeting will be filed with the minutes of this special meeting. Also, the judge's report will be attached to the minutes of the special meeting.

Thank you, Gary. The Secretary informs me that the records of the company show that there are 8,639,431 outstanding votes entitled to be cast at this special meeting. Assuming a quorum is present, approval of the share issuance proposal requires a majority of the votes cast at this meeting to be voted for the proposal. The Secretary previously delivered to the judge of election the list of stockholders and all proxies that have been received.

The Secretary informs me that a majority of the total outstanding votes entitled to be cast at the special meeting is present in person or by proxy. The judge is making an exact count and will submit a formal report on the number of shares present or represented during the course of the special meeting. A quorum is declared present, subject to the confirmation of that fact by the judge in his report.

On the basis of the report of the Secretary, I find that proper notice has been given. Accordingly, this meeting has been properly convened. The polls for voting on all matters are hereby opened at this time, 10:04 a.m. Eastern Standard Time. There are 2 matters for consideration, and I intend to discuss each matter separately. When the discussion of one item is finished, I will move on to the next. The polls will close after the 2 proposals have been discussed. If you have already voted by proxy, there is no need for you to recast your vote.

Does anyone in attendance at the meeting need a ballot to vote at this meeting? Hearing none, at conclusion of the discussion of the 2 items, we will take the vote on all items. I will then report on the operations of the company as it relates to the merger. There will be an opportunity for questions and comments of general nature after the discussion and voting on the 2 matters and my report on the operations of the company has concluded.

Please note that in the interest of all stockholders, we will only address those questions that are pertinent to the business of the meeting. At this -- as this is a special meeting, the business of this meeting is limited to the 2 matters stated in the notice of the special meeting.

The first proposal is to approve the issuance of Esquire common stock to the holders of Signature common stock pursuant to the merger agreement. A copy of the merger agreement was included as Annex A to the joint proxy statement prospectus. Is there any discussion with respect to the proposal to approve the issuance of Esquire common stock to the holders of Signature common stock pursuant to the merger agreement?

Hearing none, I move on to the second proposal. The second proposal is the adjournment of the special meeting, if necessary, to solicit additional proxies in the event there are not sufficient votes at this time of the special meeting to approve the Esquire share issuance proposal. We do not plan to adjourn this meeting. Is there any discussion with respect to this adjournment proposal?

Hearing none, this concludes the discussion on the 2 proposals. The proxies have voted the master ballot, the polls for voting on the matters before the meeting are hereby closed at 10:06 a.m. Eastern Standard Time.

I now open the floor for general questions and comments.

[Operator Instructions] There are no questions at this time. I will turn the call back to Andrew Sagliocca for closing remarks.

Thank you. The vote tally is complete. The Secretary will now read the certificate and report of the judge of election.

Thank you. The report confirms that a quorum is and has been in attendance at the special meeting for all purposes. The report also shows that a majority of the votes cast by stockholders present at this special meeting have been voted in favor of the proposal to approve the Esquire share issuance proposal.

Great. Thank you, Gary. Just to let everybody know who hasn't seen it, there is a joint press release that was issued this morning. It's in regards to the final exchange ratio. The Signature team successfully sold their Schedule A loans. Their recovery rate was approximately 62%. We had estimated it for the prospectus around 50%. The associated exchange ratio is now locked in at 2.671 shares, which is only about 50,000 shares or about 1.6% difference from what we put in the proxy statement.

I will now move on to the meeting. The report of the judge of election as presented is accepted. Mr. Lax will safeguard the oath and the certificate and report of judgment of election and maintain them among the records of the company. There being no further business to come before the special meeting, a motion to adjourn is in order.

Second?

Eric, you move.

Yes, I move.

Michael, you second?

Second.

Those in favor, signify by saying aye.

Aye.

Any opposed, say no.

The motion is carried and the special meeting is adjourned. I want to thank everyone for attending today's meeting and for the interest you've shown in the affairs of the company. I want to thank everybody over at Signature, Mick and his executive and management team and Len and the full Board. They pushed really hard to get the Schedule A loans sold at what I believe is a really great price for those loans, and I'm glad that's behind us also. So I want to thank them over at Signature and the meeting is adjourned. Thank you, everybody.

Ladies and gentlemen, this concludes today's meeting. Thank you all for joining. You may now disconnect.

Thank you for standing by, and welcome to Annual Meeting of Shareholders of Esquire Financial Holdings, Inc. [Operator Instructions] I will now turn the call over to Andrew Sagliocca, Vice Chairman, CEO and President of Esquire Financial Holdings, Inc. Please go ahead.

I want to welcome everybody to the Annual Stockholders Meeting for Esquire Financial Holdings. The annual meeting will please come to order. My name is Andrew Sagliocca. I'm the Vice Chairman, Chief Executive Officer and President of Esquire Financial Holdings and Esquire Bank. I will serve as Chairman of the Annual Meeting.

I want to thank everybody for taking time from their busy schedules to be with us today, and we really appreciate it. I want to introduce Gary Lax, SVP, Chief Legal Officer and Corporate Secretary of the company, who will be Secretary of the Annual Meeting. Also in the boardroom with me is Eric Bader, our EVP and COO; and Michael Lacapria, our SVP and CFO.

For those who have questions, there will be a time during the meeting to address your questions as they relate to the relevant matters. The Board of Directors has appointed Eric Bader, EVP and COO of the company to act as the Inspector of Elections at the annual meeting and any adjournments and to count and examine all votes. The inspector's report will be attached to the minutes of the annual meeting. I have delivered to the inspector a list of stockholders of the company entitled to vote at the annual meeting, arranged in alphabetical order as of the close of business on March 26, 2026, the record date for the vote.

I'm going to turn the next several sections over to Gary Lax and I will jump back in when it's time to update you on the performance of the company over '25 and the first quarter of '26. Gary?

Thank you, Andrew. The records of the company show that there were 8,637,034 shares of common stock issued outstanding and entitled to vote at this annual meeting, of which 4,318,518 represents a majority. We have previously received confirmation that the notice of annual meeting, the proxy statement and a proxy card were mailed to each stockholder of record as of the close of business on the record date.

I have previously delivered to the inspector the list of stockholders and all proxies that have been received. A majority of the total outstanding shares entitled to vote at the annual meeting are present in person or by proxy. The inspector is making an exact count and will submit a formal report on the number of shares present or represented during the course of the annual meeting. A quorum is declared present, subject to confirmation of that fact by the inspector in his report.

The business to be acted upon at the annual meeting, as stated in the notice of annual meeting, is to consider and act upon: one, the election of 1 director to serve for a term of 2 years and the election of 3 directors to serve for a term of 3 years each; two, the ratification of the appointment of Crowe LLP as our independent registered public accounting firm for the year ending December 31, 2026; and three, an advisory vote on executive compensation.

Because no stockholder proposals were properly filed with the company's Secretary in advance of this annual meeting as provided in the bylaws, the business of this meeting is limited to the foregoing 3 matters in accordance with the bylaws. The proxies solicited by the Board of Directors can be tallied at one time, even though each proxy contains 3 different matters for consideration. Similarly, the ballots that any stockholder present seeks to cast here can be handled the same way.

Accordingly, we intend to proceed to discuss each matter separately. And when the discussion of one item is finished, we will move to the next item. At the conclusion of the discussion of the 3 items, we will take a vote on all items. We will then have a report of the operations of the company. There will be an opportunity for questions and comments of a general nature after the discussion and voting as to the 3 matters and the operations reported has concluded.

We will consider the proposal in the order presented in the notice of the annual meeting. The polls are now open. At the conclusion of the discussion on voting of all matters, I will announce the closing of the polls.

The first item of business to be voted upon is the election of Todd Deutsch to serve for a 2-year term and the election of Raymond Kelly, Robert Mitzman and Kevin Waterhouse to serve for a 3-year term as well as directors of the company as described in the proxy statement. All nominees are currently members of the Board of Directors. So biographical information regarding the 4 nominees is included in the proxy materials, and all nominees are prepared to serve if elected. Are there any questions regarding the election of directors?

Okay. Second item of business to be voted upon is a proposal to ratify the appointment of Crowe LLP as our independent registered public accounting firm for the year ended December 31, 2026. Are there any questions regarding the ratification of the appointment of Crowe LLP?

Okay. The final item of business to be voted upon is the proposal to approve an advisory vote on executive compensation. Are there any questions regarding the proposal to approve an advisory vote on executive compensation?

Okay. This concludes all discussion on all matters.

If there -- I declare the polls closed. All ballots and proxies are now in the custody of the Inspector of Election, and I turn it back over to Mr. Sagliocca.

Thank you Gary. I'd like to now take a few minutes to give you a report on the operations of the company. In '25, Esquire has remained very steadfast and focused on creating long-term stakeholder value, shareholder value, client value, employee value. All stakeholders across the board. On a daily basis, were very, very focused on client service, making sure we look at our commercial relationships holistically and an unwavering obligation in excellence at execution by our valued managers and employees.

Performance for '25 at a high level. We ended '25 with $2.4 billion in assets and just shy of $300 million in equity. Profitability over the year was exceptional. Net income increased almost 17% to $50 million or $5.87 per diluted share. And our returns on assets and equity were 2.43% and 19.4%. Coupled with that, our compounded annual growth rate over 5 years for EPS has been 27%.

We believe that our yields -- our premium yields and risk-adjusted yields, and we've maintained a fairly consistent margin over the past 3 years, north of 6% -- our cost of funds, again, we believe is an industry-leading cost of funds at 1% on our $2 billion plus of deposits, anchored by our national litigation platform, which represents about 80% of those deposits.

Growth was robust. Loans increased 26% to $1.7 billion, almost $1.8 billion, and our compounded annual growth rate for loans over the past 5 years was about 19%. Associated with the growth and the margin is strong revenue growth and diversification. So revenue grew 17% in '25. And we also have a mix of revenue between the margin and fee income, and that mix on the fee income side is anchored by our national payments platform or merchant acquiring platform. And fee income in total is just shy of about 20% of total revenue even in the current year.

Coupled with those financial metrics, there's a few other things to point out. We continue to increase our quarterly dividend annually. It's up [ by 20% ] that's the fifth year in a row. We opened our flagship branch in L.A., California to support our clients and our future growth. We commenced and started to make an investment in our new 50,000 square foot headquarters within the same complex as we are currently, but twice the space or pretty close to twice the space to support growth and state-of-the-art technology that we use and we will continue to use.

And in the past year, we added Raymond Kelly to the Board of Directors, who brings extensive banking experience over the past 40 years in the industry as a banker and outside the industry in public accounting over half his career or more. Some of the accolades that we've received in the past year, coupled with the performance, I'll name a few. Esquire was named the Piper Sandler's 2025 Bank & Thrift Sm-All Stars. We were included in the KBW Bank Honor Roll. We were awarded by Raymond James, the Community Bankers Cup, and we were recognized by S&P Global as a Best-Performing Community Bank and one of the best performing banks on deposit growth.

Coupled with all of that, as most all of you are aware, we announced in early '26, the merger and acquisition of Signature out of Chicago. Signature is a premier commercial banking franchise in the Metro Chicago area and Midwest. The combined company on a pro forma basis would have just shy of $5 billion in assets. We're excited about joining our national verticals with their commercial banking focused vertical in the Midwest. We're excited to have them join. And when I say that, I mean their Board -- select Board members that are joining our Board, their executives, their senior managers and all their employees.

The deal, as we announced in March, is not necessarily reliant on cost savings. We've only estimated about 5% cost savings for the full year, which would be the second year, the year after the acquisition. So the deal is highly accretive to both earnings and tangible book value with minimal cost savings.

Importantly or most importantly, the merger brings together 2 highly profitable and high-performing and high-growth institutions that ironically were started around the same time frame.

As I look to the first quarter, more of the same good news. I'll give you a few highlights. In the first quarter, adjusted net income and earnings per share were about $14 million and $1.58 per share. That's adjusted for merger charges and the retirement of certain Board members and the related accelerated amortization on their restricted stock.

Adjusted return on assets and equity were just shy of 2.40% and just shy of 19%. The margin has hung in at 6.04%. Loan growth was about 13%. Typically, our first quarter is a lower growth quarter due to paydowns of draws that happened in the fourth quarter, and we also had strong corresponding deposit growth. So in summary, the first quarter was akin and similar to the performance in '25.

That's my financial update. I'll hand it back off to Gary at this point, unless anyone has any questions on that update.

Kate, I'll turn it over to you first.

At this time, there are no phone questions.

Okay. Great. So we'll move it back to Gary.

Okay. The inspector has completed his count, and I will now read the certificate and report of the Inspector of Elections. The report confirms that a quorum is and has been in attendance at the annual meeting for all purposes. The report also shows, first, each director nominee received an affirmative vote of at least 78.22% of the shares voted. Second, 97.99% of the shares voted were cast for the ratification of the appointment of Crowe LLP as the company's independent registered public accounting firm for the year ended December 31, 2026; and third, 97.19% of the shares voted were cast for approval of the executive compensation. Accordingly, each director has been elected as a director of the company. The proposal to ratify the appointment of Crowe LLP has been approved, and the advisory vote on executive compensation has been approved. The certificate and the report of the Inspector of Election has been accepted and approved and will be attached to the minutes of the annual meeting. There being no further business to come before the annual meeting, a motion to adjourn is in order.

I make a motion.

I second.

Those in favor, say aye.

Aye.

Those oppose, say no.

The motion is carried and the annual meeting is adjourned. Thank you, everyone, for coming to this year's annual meeting and for your continued support.

Thank you everybody.

Once again, that does conclude today's conference. We would like to thank you all for your participation today. You may now disconnect.

Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q1 2026 Earnings Release Conference Call. [Operator Instructions] Thank you. I would now like to turn the call over to Andrew Sagliocca, Vice Chairman, Chief Executive Officer and President. Please go ahead.

Thank you, Kate, and good morning all. I want to welcome you all to Esquire's first formal conference call for the first quarter earnings release. On the call with me is Eric Bader, our EVP and COO; and Michael LaCapria, our SVP and CFO. Our format for our first call will be simple. I plan to hand the call over to Michael to give you a financial update for the first quarter. After Michael is done, I'll have a few comments and update you on several items that I feel are important. And finally, we'll open the call up to questions from our investors, analysts and other guests on the call. At this time, I'll hand the call over to Michael.

Thank you, Andrew. To those in attendance on the call, I intend to provide a brief summary of our performance highlighted in the earnings release and investor presentation published premarket this morning. Let me start with our first quarter net income. For the current quarter, we printed GAAP net income of $12.2 million or $1.40 per diluted share.

These results included $1.7 million of elevated pretax noninterest costs, of which were merger costs associated with our acquisition of Signature Bank Corporation and $398,000 in accelerated stock compensation expense related to the previously announced departure of 2 Board members.

Excluding these 2 items, our adjusted net income was $13.8 million or $1.58 per diluted share. These adjusted results are in line with adjusted fourth quarter 2025 net income of $13.6 million or $1.57 per share and represent a $2.4 million or a 21% increase over the first quarter 2025 net income of $11.4 million or $1.33 per diluted share.

Our adjusted returns on average assets and equity continue to be industry-leading at 2.37% and 18.95%, respectively, while we invest in our current resources to support future growth and maintain excellence in client service from which our customers have grown a customer.

Our net interest margin remained resilient at 604 basis points, fairly consistent with prior periods despite our asset-sensitive balance sheet and significant declines in short-term interest rates over these past 3 years.

Loan growth, on a linked quarter basis, was $56.7 million or 13% annualized, reaching $1.82 billion. This growth consisted of $30 million in commercial loans and $23.3 million in commercial real estate, which was tempered by $53.1 million in anticipated litigation loan paydowns in response to seasonal elevated commercial loan draws we saw linked to the prior quarter.

As it relates to our litigation loan portfolio, we saw $44 million or 15% annualized net growth bringing our litigation book to $1.22 billion at a yield of approximately 9% for the quarter. On an average basis, our overall loan portfolio grew $115.6 million or 28% annualized compared to the trailing quarter fueled by our national litigation platform.

Deposit growth on a linked quarter basis was $39.6 million or 8% annualized, where our total deposits reached $2.1 billion at a cost of funds, inclusive of demand remaining flat at 1%. This quarter's deposit growth was again tempered by the anticipated escrow and ITA disbursements from elevated settlement balances in the prior quarter.

Off-balance sheet sweep funds totaled $1 billion, where approximately 33% is available for on-balance sheet liquidity. Our administrative service fees associated with these funds totaled $1.1 million. Additional available liquidity, including cash borrowings and additional sweep balances totaled approximately $1.1 billion.

Asset quality remains strong. Our allowance coverage was 1.3% with nonperforming loans totaling $736,000 at a ratio to total assets of only 3 basis points. We have 0 exposure to commercial office space or construction and vacant land loans. As far as credit activity for the quarter, we foreclosed on the properties securing our on $7.8 million nonaccrual multifamily loan and sold it to an unrelated third party, recognizing a $3.2 million net charge-off.

Noninterest income was stable at $6.5 million or 16% of total revenue, led by our payment processing platform that services 93,000 small business clients and processed $9.7 billion across 137 million transactions this quarter. Adjusted operational expenses of $19 million were in line with the trailing quarter driving an industry-leading adjusted efficiency ratio of 46.9% as we continue to invest in our platform.

Our capital foundation is strong and well capitalized with equity assets of 12.44% and and bank level regulatory leverage and CET1 ratios at 11.85% and 14.25%, respectively. From a corporate perspective, we increased our regular quarterly cash dividend by 14% to $0.20 per share paid this past March.

Now I'll turn it over to Andrew to provide commentary on the business.

Thank you, Michael. I'd like to take a moment before we get started on any comments to recognize one of our former board members who just retired for health reasons, in his [indiscernible]. Zig is a founding board member, and he's been with us 20 years. I want to thank [indiscernible] for his vision, stewardship, dedication, belief in all of us, and last but not least, its friendship for over 2 decades. He's been invaluable to the institution and has been our Chairman of our Directors Loan Committee, which has been an invaluable role for the institution. So thank you.

As Michael noted, we had another strong quarter, including or excluding certain adjustments totaling $1.7 million related to the pending signature merger. -- and certain acceleration on stock grants related to the 2 former board members. So I don't want to go back over Michael's comments. It was very thorough. But just to add to Michael's growth and performance metrics comments, I think it's worth noting that this quarter is not an anomaly for our institution. And in order to demonstrate this, I'll give you a few highlights about our compounded annual growth rate over the past 5 years. loads, loan compounded annual growth rate over 5 years was 21%.

Within the loan category, commercial litigation-related loans grew 31%. Our deposit compounded annual growth rate over the last 5 years was 20%. Within that, the commercial litigation deposit growth was 25%. And equity has grown for the same 5 years, 18%, and it's all generated from earnings with no associated capital raise. This has caused revenue to grow over the last 5 years at 23%, diluted EPS to grow at 29%. All this, while maintaining a net interest margin north of 6% and since 2023 despite significant short-term rate declines since '23 and despite SAR being asset sensitive. Last but not least, our return on average assets has been north of 2.25% since 2022, and our return on equity has been north of 8% since [indiscernible].

I'll give you a quick update on our pending merger with Signature. We've made strong progress on the Signature merger to date, including filing all regulatory applications following our Form S-4 with the SEC, we've engaged a nationally recognized advisory firm to assist with the merger and integration milestones and to keep us on task and on point. And we've already conducted various key merger and integration planning sessions with both management teams from as [indiscernible] and Signature.

For anyone from signature on the line, we want to thank you for you trusted us and also for working closely with us before the announcement and obviously after. We believe, as we've disclosed in the past, that the Signature merger is transformational for us and the next foothold in 1 of the 3 largest markets that we see by both population and number of contingent fee law firms that being the New York market, where we are headquartered, the Los Angeles market, which is our second largest market, where we recently at the end of '25, opened our Los Angeles branch.

And we also have 2 regional medias servicing the area besides our Los Angeles brand staff and obviously, the Chicago metro area which is key to the Signature acquisition. So we're going to focus on rolling up our sleeves, making sure the integration is flawless, making sure we continue to service our clients and also making sure we continue to grow in a safe and sound manner.

With that being said, I will now turn it back over to Kate to open it up for any questions.

[Operator Instructions] Your first question comes from the line of Tamas Reid with Raymond James.

It's been about a year since you announced the JV agreement fortress. Can you maybe talk about how that relationship is going and if there's the potential to maybe scale that up post signature, given the step down in litigation and deposit concentrations?

Sure. The relationship with Fortress is going well. We speak to their senior and executive team fairly frequently. We've shared information and notes on the vertical, that being a litigation vertical. We've worked on various opportunities, a handful have come to fruition. I would say that with the signature merger and our legal lending limit significantly increasing from right around 40-odd million to as much as $70 million or $80 million on a pro forma basis. The need for them would be less logically, but Fortress 10 and will be a good business partner for us on longer duration type inventories that law firms carry, and those usually revolve around mass [indiscernible].

But the relationship has been good. We've been able to get a couple of deals done together, also as the bank and then as the nonbank finance company in a very synergistic way and it continues to build momentum. But I don't think -- we're slowing fortress down from their growth that they've experienced over decades. And certainly, we're doing well with or without the relationship looking forward.

Okay. That's good color there. I appreciate that. And payment processing business just hasn't really grown in a meaningful way kind of becoming a smaller part of the overall franchise. I know you did the Tasley transaction a couple of years ago. is that business something that you view as core to the overall strategy? Or would you be open to potentially divesting from that?

That is absolutely core to the overall strategy. If you look at the payments business, we've grown about 10% in volume a year. So it has grown volume-wise, but a $12 billion industry in the U.S. is a commodity. Everybody has prepaid cards, debit cards and credit cards and their wallets. Everybody uses them. There's less than 100 banks that are merchant acquiring banks in the industry. So we believe the platform is very valuable, and we have no plans on divesting of it. But it is a commodity.

There are 1,000-plus independent sales organizations. There are huge if you want to call them mega ISOs, believe it or not, Fiserv First Data is not only a platform, but they bought their own merchants and work with ISOs and banks probably one of the biggest, obviously, Chase and Citi and Wells are all part of it. A platform as we've established it is a low-risk focus with about 75%, 80% of it being low risk. But if you think about it mathematically, maybe the revenue is fairly static. The volumes grow. And quite honestly, when we were -- had a more normal net interest margin of 4.5% or 4.75%, it represented 20-plus percent of the revenue. So just because it's less of the overall revenue base doesn't make it less valuable.

We don't garnish any to speak of fee income from our commercial clients other than our ASP fee income on managing mass torts -- so the platform is invaluable, and we have no notion or thought of divesting it, and we will continue to grow it, and we will continue to look towards doing direct business with merchants, especially with the pending signature merger rather than the indirect business that we do almost holistically now through the ISO networks that we have.

Your next question comes from the line of Tim Switzer with KBW.

So the first one I had is with Signature, both things have, I think, pretty unique but seems like similar cultures. Can you talk about how the reception has been from the signature side of things, especially in terms of shifting their focus a little bit towards that litigation-related living a little bit more -- and like how quickly can Signature get up to speed on Esquire's style of litigation lending and like ramp-up volume there? Like efforts in training started already? Or is that post acquisition?

Good question, Tim. So the integration is going really well. The reception has been outstanding. We've been to their shop in Chicago and met with all their employees, not just a handful, not just management, all of their employees over the course of an entire day, 1.5 days, call it, -- not only was the feedback outstanding when we were there, but the feedback after we left has been great. And the collaboration to date on the merger and integration because as I've said, we've already had numerous meetings over the last couple of weeks, more than I anticipated, which is good.

The collaboration and communication between the management teams at the merger and integration level has been really strong. Vice versa, the Signature team came out to Jericho and not only met with the senior management team, but met with all employees in all departments. -- and the reception here was excellent. So I hate to say check the box, but check the box. Things are going really well. As you know, the deal in it financially has minimal cost savings. And from a people perspective, that's a good thing. So that makes people more comfortable that to compare and contrast the end-market acquisition, as you know, there'd be a lot more cost savings, which not only comes down to systems, but would come down to overlapping people. So that's not the case here.

As far as the litigation vertical is concerned, we've started working internally before the merger announcement on the data and data analytics and CRM and how we're going to focus on marketing. We already have a senior business development officer in the Midwest out of Minneapolis. That individual has already met with some of the Signature Business Development Officer is at an event, a litigation event out in the Midwest. We've been talking myself and Mary Kornhever. -- who runs our business development vertical for litigation. We've been on various calls with their senior executive team and their business development team -- and yes, we plan on discussing, planning towards and the like prior to closing.

As far as training -- as far as training goes, probably the best way to answer that question is we have a really robust commercial underwriting team over here. So I'm not concerned about the Signature team on the lending side, worrying about underwriting, especially when we merge and even thereafter, call it shortly thereafter, business development wise, they have great business development people over there. And yes, we plan on sitting with them and training, I guess, for lack of a better term, but the best way to go about this is to go out and visit law firms in the Chicago market that are either their clients or that they know and are aware of signature or their clients now.

And the best way to get it done is to go to those meetings with both sets of teams because that's the best on-the-job training you could ask for. And ironically, last but not least, the National Trial Association for AHA is in Chicago this July, so we're already planning for that event with both sets of teams.

Great. Appreciate the following [indiscernible], Andrew. moving to a different topic. How should we think about the NIM trajectory going forward? And just to make it simple, let's assume no rate cuts.

Sure. Well, you know Michael and I, we've already done that, Tim. So -- so we're looking at -- I know you'll see us sitting at 604 for the quarter. So in round numbers, we look to FHN for the forecast, not that it's better or worse than anybody. It's -- it covers a 2-year period, and it's traditionally what we've used. And it's traditionally what Eric uses internally for asset liability management and the ALCO models and all that stuff. So we just want to stay consistent there. So if you look at their rate forecast, they have no rate cuts for '26 and then they have 50 basis points or 2 rate cuts for '27 starting in June to 350 from 375 and then going from $325 to $350 in the September 3rd quarter of '27.

So we see the NIM on average being around 590-ish low, call [indiscernible] through the end of the year. We do see some compression from 604 and then we see another 10 basis points in '27.

Got you. Very helpful. And then the last one, sort of related -- what are your plans to deploy excess deposits, if any, like the time period for that? You have I think the $1 billion off balance sheet on the liquidity from Signature might add just forward to that. So I would love to get your guys' thoughts on if that's an opportunity for you at all.

Sure. So if we start with liquidity at the top of the house, we keep around $100 million over the weekend, closer to $150 million on the balance sheet for the merchant platform. Obviously, with almost $10 billion clearing a quarter. There's a lot clearing through our Fed account. Eric has secured significant day line overdraft lines at the Fed, so we don't worry, but we also don't want to make our friends at the Fed worry. So we'd rather keep the excess cash on hand. So call it, on average, about $100 million that make us comfortable and our friends at the fed comfortable managing our merchant platform.

I think any excess liquidity can be deployed fairly quickly quarters with what we're going to do on a combined basis, my hope and prayer is that we always have excess liquidity. I'd always -- I'd rather have the NIM compress a little bit and have a lot of dry powder on the balance sheet and be talking to you about a 5 or 10 basis point miss on the NIM for the quarter because we have excess liquidity than the latter, which is no core excess -- not that I'm afraid to borrow or any of us here are, as part of traditional banking. We've been very blessed and fortunate that we do not have to borrow to date. But I think on a pro forma basis, when you look at either us independent of signature today or pro forma combined looking forward, where we run now about 85% loan-to-deposit ratio is probably a good ratio before and after the merger is consummated.

Your next question comes from the line of Justin Crowley with Piper Samer.

This is [indiscernible] filling in for Justin Crowley today. I just had a question about the litigation book. I know we've seen impressive growth over the past couple of quarters. And as you mentioned, this quarter came in at a slightly lower pace with the anticipated pay downs. And I know the segment can be a little lumpy. Could you give us a sense for maybe the current pipeline of new law firm relationships and maybe the loan demand you're seeing in that segment, whether it's accelerating or decelerating in the near term?

Yes. I don't see it decelerating. I gave you the the 5-year CAGR for the litigation book, it's 32%. And you would say that's weighted towards the earlier periods, and it's more weighted towards a latter of periods. -- the latter periods, we're in the high 30s for that litigation book as far as growth. There's a bullet or a part of a bullet in the earnings release and in the investor deck that talks about the analysis we did. We've officially included this in the Signature merger announcement back on March 12. And it's pretty important and we spent multiple quarters on this to make sure that we were accurate with the data, but the compounded annual growth rate for loans and deposits for customers that have been with us 4 years or more.

So that's customer growth based on facilities they use that we supply that they use to then grow their business, then they come back every year and are looking for more availability. That's 15% on the loan side and 30% on the deposit side. So our legacy customers year in and year out grow with us internally because they use the facilities correctly to grow their book of business to grow their revenue stream and then to earn the right to come back to us and ask us for more availability. So you got 2 items going on here in the loan book. You have new customer origination that is very robust and strong, and we're very comfortable with and comfortable with the independent Street estimates with us standing around 15% to 17% loan growth, god willing, we do more. I'd love to do more overall on a blended basis.

But you have a second piece, which is unique certainly unique for me after 38 years of doing this, where you have your own customers growing with you internally because they're using our lending facilities the way that most people think of capital. So we're very comfortable. The sales pipeline, our business development pipeline is very robust. It is certainly not in a low water market, it's closer to a high watermark.

The business development teams around the regions that we hired them in are doing excellent significantly increased the lending back office team and the underwriting team and the servicing team, both in lending and in operations, and we're very comfortable where the loan pipeline stands today.

And last but not least, we usually grow certainly, my recollection is last year and maybe the last 2 years in the first quarter by a minimal 4% or 5%, 6% annualized growth because of those pay downs happening from the fourth quarter high watermark [indiscernible]. So we're very pleased with the 13% annualized growth this quarter.

Quite honestly, myself pleasantly surprised.

I'll now turn the call back to Michael Lacapria, Chief Financial Officer, for closing remarks.

I think I'll turn that over to you.

Those are -- I assume, Kate, those are all the questions. We want to thank everybody for joining us on our first investor call conference call. Obviously, we'll continue to do it. Our earnings this way going forward. And I think it's more efficient and effective not only for us, but hopefully, for the people on the phone, certainly saves Eric and Michael and I, a lot of time from having multiple calls that were only accelerating. And obviously, with the pending signature merger. My hope is that the earnings calls become more robust as we combine not only the banks, but the investor base across both companies. So I want to thank everybody and wish everybody a great weekend and thank you all.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the Esquire Financial Holdings, Inc. Acquisition of Signature Bank Corporation, Inc. [Operator Instructions]

I would now like to turn the call over to Andrew Sagliocca, Vice Chairman, Chief Executive Officer and President of Esquire Financial Holdings. Andrew, please go ahead.

Thank you, Tiffany. Thank you, everybody, for joining us this morning for this exciting news. I'd like to start before we walk through the deck with just thanking the Signature Board, starting with Len, for his vision and leadership of Signature. I'd also like to thank the executives over at Signature, Mick, Kevin and Bryan and their entire senior management team and employees for all their hard work over 20 years in building what is a premier commercial banking franchise.

I'd also like to thank my Board, Tony and all the Board members for their trust in us. I thank the management team on my side, from the executives through senior management for all their hard work over the last several weeks and months to shepherd this deal. And I will also include Mick and his team in that thank you, too, all my employees. Because without both our sets of employees, we aren't where we are today. And last but not least, I'd like to thank all the professionals, Piper Sandler, Luse Gorman on the Esquire side, and on the Signature side, Raymond James and Vedder Price for their hard work and focus in shepherding this deal to the finish line.

If we look now to the presentation, I'm going to start on Page 4, transaction highlights. This transaction, as you can all see, for those of you online, is strategically compelling. Signature is a premier Chicago commercial banking franchise as well as throughout the Midwest. They are in the third largest MSA in the country, that being the city of Chicago, up there with New York City and L.A. And the Chicago market, from our data and our understanding, is a leading growth engine for our national litigation vertical, along with the leading growth engine for Signature's commercial growth today and including tomorrow.

We believe the transaction enhances our scale, resources and balance sheet and diversifies us so that we can continue to accelerate growth in the Midwest and nationwide. And it also strategically diversifies our balance sheet on the Esquire side and allows us to continue to accelerate our growth in what I believe is a very highly valued litigation vertical that we run and focus on and also allowed us to deploy excess capital in the transaction in the mid- to high teens IRR without raising any associated capital with the deal.

It's an excellent corporate fit. Signature, like us, was founded in 2006. It was built from an idea from the ground up. They share the same relationship-based operating philosophies as us. And key to the transaction is not only the top 3 executives contractually entering into employment contracts, but more importantly, having the desire and the vision to want to lead the Chicago and Midwest franchise and oversee the commercial business. And last but not least, they focus, as we do, on very strong commercial relationship banking across their lending and deposit base.

We believe it's a very low-risk merger with limited disruption to our clients. It's an out-of-market acquisition. It's in Chicago. We're in New York. Signature will be run as a division of Esquire, keep the Signature name. And in our modeling assumptions, we assumed minimal, very minimal cost savings, only 5%, most of which is technology synergies from consolidating the back office.

I will continue to be the Vice Chairman and CEO and the President of the company. And myself and my senior management team have fairly extensive background in M&A, even though at Esquire, this will be our first M&A transaction. And last but not least, it combines 2 very experienced and focused management teams.

Finally, the deal is financially attractive. It doubles the size of both franchises, adding resources in a very enviable market, that being the Chicago market. And from a deal perspective, we see this as 23% accretive to our 2027 earnings per share and 11% accretive to our tangible book value. Without raising capital, it maintains very strong capital ratios, again, with no associated capital raise for the combined company.

On Page 5, an overview of Signature is quite impressive. As I said, they were founded the same time we were, 2006. And the Board and executive team, Mick and Kevin and Bryan, have been relationship-focused and have created a great franchise in the Chicago market area. The target market is middle market, and they run a high-touch commercial banking model similar to what we do. They are $2 billion in size today. Again, I'm going to sound like a broken record, similar to us. And they are, without a doubt, best-in-class, running one of the nation's highest performing community banks.

The metrics stand for themselves. A $2 billion bank with $1.3 billion in loans. A small CRE concentration of 161%, a strong loan-to-deposit ratio of 74%, an industry-leading NIM of 4.13%, industry-leading efficiency ratio of 41%. They carry excess capital, as we do, with a leverage ratio of 12% and generate industry-leading returns with a 1.85% return on average assets and just shy of a 20% return on average tangible common equity. Their compounded annual growth rate has been 13% over the last several years. They have a lot of dry powder for organic growth. Their charge-offs are minimal over their historic period from '16 forward. And they have a very enviable noninterest-bearing deposit base at 35%, with a cost of funds of 1.42%. Very impressive franchise, easily top 10%, if not top 5% in performance in the country.

Page 6 walks you through the transaction summary. Structure and consideration, it's 100% common stock. The exchange ratio is 2.63 of Esquire shares for each Signature share with a high range of 2.8x and a low range of 2.5x based on the net sale proceeds or value of the Schedule A loans that I will explain. At 2.63x exchange ratio, 2.63 shares of Esquire for every 1 share of Signature, they will own 28% of the combined company, with our shareholders owning 72%. The equivalent price for Signature per share is $260. The aggregate transaction value is just shy of $350 million with a strong price to tangible book, a strong price to long-term EPS and a pay-to-trade ratio of 52%.

From a Board of Directors standpoint and management and branding, we are thrilled to welcome Len, Signature's current Chairman of the Board, to our Board; and Mick, Signature's Founder, Board member, CEO and President, to our Board. Mick and Bryan and Kevin, the 3 executives of Signature, will remain at the combined company and run the Midwest and Chicago division. They have entered into new employment agreements with Esquire and also have a lockup agreement with Esquire. I view that as secondary. Mick and Bryan and Kevin are wildly motivated to put these 2 companies together and continue on this growth and performance trajectory for all our stakeholders. We are all of similar age and have a lot of energy left to really take this institution to the next level.

The Signature brand will remain after closing. And Signature will be branded as Signature, a division of Esquire Bank. Typical, this is subject to Esquire and Signature shareholder approval, along with regulatory approval. And we expect this to close in the third quarter of 2026.

On the next page, Page 7. This, to me, is a very simple explanation of what we negotiated and spent a lot of time on, which we call Schedule A loans. There are 4 Schedule A loans for $70 million that are criticized. Depending on the value that they are liquidated at, will not only create an associated loss on those loans, but also, the exchange ratio will range between 2.80 and 2.50. So we're looking at a 2.63 exchange ratio, which assumes a 50% recovery rate on the assets. We believe that the Signature team will get better execution than that. As the execution increases all the way up to par, so does the exchange ratio. So they go from 2.63 exchange to a 2.8 exchange. And obviously, if it's less than, there's a floor of 2.50.

I think this page is pretty simple. Why? Because it shows at the high range of 2.80, the mid-range of 2.63 and the low range of 2.50, the metrics are commensurate across the board. They're not identical, but pick tangible book value accretion, for instance. It ranges between 8% and 15%. If you look at EPS accretion, it ranges between 25% and 20%. If you look at capital, the impact is minimal.

If we go to the next page on Page 8. For those who know us and cover us and invest in us that we've spoken to in the past, myself and Eric Bader and Michael Lacapria, as we speak to our investors and our analysts, have been telling them this story for the last several years. And we believe that Signature fits our acquisition criteria for the deployment of our excess capital.

So the chart is pretty compelling. We were looking for a commercially focused institution. They are a $2 billion institution commercially focused in middle market C&I lending. We were looking for a strategically located, highly desirable metro market for our litigation vertical. They are headquartered in Chicago. Not only is it the third largest metro area, but it's the fourth largest for law firms in the country and the third largest for plaintiff law firms in the country, right behind New York and L.A.

It diversifies Esquire's lending and funding source. As we blend these 2 companies together that are complementary, it takes Esquire's litigation concentration on the loan and deposit side from 70-plus percent to just under 50%. It allows us to continue to accelerate that growth, and it also diversifies Signature's balance sheet from the Chicago Midwest region and middle market to another vertical that they understand and execute on. But the growth potential for them is tremendous, which Signature [ is us ] after the acquisition closes. Have a very strong credit culture and associated relationship banking, that was another box we wanted to check. They were branch-light. That's the fifth box. They run at a 42% efficiency ratio and only operate 3 branches. Because like us, they leverage technology, specifically commercial cash management technology to service their middle market area.

And last but certainly not least, we were looking for a highly profitable institution with a strong margin, strong efficiency and a really good ROA and ROE. And Signature checks every box: a 1.85% return on assets, a 20% return on equity, a 4.13% margin and a 42% efficiency ratio. If you would have asked me if we could have checked all the boxes a year ago, I would have said no. But Signature checks all those boxes and more.

On Page 9, the Chicago market is certainly an attractive market for the demographics. It's the third most populous in the country. It's one of the most diversified economies. It is business-friendly with elite talent and central access to global markets, and it's a significant opportunity for a relationship-focused bank like Signature and Esquire. I won't bore you with the population or the gross GDP and the like. I'm sure everybody can review that, but it also has an above-average median household income and household growth rates.

Page 10 looks complicated. It's not. It's very simple. Our commercial litigation vertical is extremely important to us and our investors and our clients, and the Chicago opportunity provides us with leverage to scale our platform with the direct help and assistance of Mick and Kevin and Bryan and their management team and their employees. As I said, it's a premier market, fourth largest for law firms, third largest for contingency fee law firms. We validated that our products are a market fit. We just have a lot more leverage in that market in front of us than we do behind us.

The geographic density of the law firms just in the downtown area is well over 1,000 law firms. So if you look to the right of this chart, you'll see that the top cities by population and law firm are New York, L.A. and Chicago. We also have Houston and Phoenix, San Antonio, Philadelphia, San Diego, Dallas and Fort Worth, Texas, all in there.

We've highlighted Chicago not because that's where Signature Bank is located, that's obvious. We've highlighted Chicago because out of the third most populous city and fourth for law firms and third for litigation law firms, we do not do a good job. We are #11 as far as a penetration ranking. So all that means is there is a lot of upside in that market for us.

So if we look at comparable market share or potential upside, Houston, we're at about 2%. New York, we're at about 7% penetration. If we can match Houston, that's 2.2x growth. If we can aspire to match New York, which is our backyard where we started the bank, there is 7.7x growth potential. That's a lot of growth potential.

If we go to Page 11. Again, I'm going to spend a little time here, but not reading the graphs. The litigation vertical has grown about 32% over 5 years. That's our compounded annual growth rate over 5 years. The deposits in that vertical have grown 25% over 5 years. When we look at that and compare it to our client relationships that have been with us 4 or more years, those clients in and of themselves by us deploying our credit facilities and allowing the law firms to invest in and grow their business, have grown with us over those 4 years, 15% on the loan side and 30% on the deposit side. That is tremendous client growth for those law firms that use our facilities as capital to invest in and grow their business. That is growth without bringing in a new client. And since Chicago is a market that is underserved by Esquire, when we couple those two together, we believe there's tremendous upside opportunity because of those two factors.

If we go to Page 12. We're going to expand the dynamic and diverse operating model into these markets, markets being New York, Florida, L.A., Chicago. That's where we have locations and people. So we have 2 offices, a branch and a headquarter here in New York. We have an admin office in Boca Raton, Florida. We will have an admin office in 2 branches in Rosemont, Illinois and Chicago, Illinois. We just opened a branch in L.A. to support not only our existing client base, but to support growth.

So we go to 7 offices. We are fintech-focused nationwide in both our litigation and payments vertical. And we nearly doubled our dedicated professionals to 250, which means we have a lot more resources at our disposal to grow our franchise, what I believe is at industry-leading growth rates. And it will create a premier and differentiated pro forma franchise. $4.8 billion in assets, $3.3 billion in loans, $4.1 billion in deposits, a 2% return on assets and 18% return on equity and a 46% efficiency ratio. And further back, I believe our pro forma NIM says something to the effect of 5.25%, but we will get there.

Page 13 lays out Esquire's loan and deposit and Signature's loan and deposit diversification and also the pro forma combined. So the highlight here, again, is simple. Our litigation vertical is about 67% or $1.2 billion of our loans and about 77% or $1.6 billion of our deposits. When we combine that with a very, very enviable Signature model which is commercial-focused and generates a significant net interest margin, since their noninterest-bearing deposits are 35% and their cost of funds are 1.42% and their net interest margin is an industry-leading 4.13%, the pro forma combined company, as I see it, allows the combined franchise not only to leverage continued growth with a commercial focus, but allows us to exponentially grow our litigation platform with the help of our business partners and friends in Chicago, where we are currently underserving that market.

On Page 14, the deal is financially and strategically compelling. As I said earlier, it's double-digit earnings per share and tangible book value accretion, 23% on 2027 earnings per share accretion and 11% accretive to tangible book value at closing. The 2027 profitability ratios, because the strength on strength of the combined entity, is a 2% ROA, an 18% ROE, a 5.25% net interest margin and a 46% efficiency ratio. Because this combined franchise will generate a significant amount of capital, the pro forma capital ratios at closing are well in excess of regulatory minimums, but we also rapidly generate internal capital from earnings. Again, it allows us to expand in a very attractive Chicago market. It allows Signature to leverage our platform also and adds to their client service. It adds significant scale, and it has an outstanding funding profile with low-cost core deposits.

On Page 15, the last page of the slide, we and Signature both conducted comprehensive due diligence on both companies. I won't read what's here. We reviewed every area, and they reviewed every area of our institution. Most important to any institution is our credit and credit review process and credit administration process. We did a bottoms-up credit file review, where we covered 87% of loans greater than $1 million and 75% of all loans. That's a significant coverage level from a bottoms-up. We also did a top-down interest rate stress test on their commercial and C&I -- I mean, their C&I and commercial real estate books. And any loans identified in that stress test were looked at and reviewed, if not reviewed in the bottoms-up. We also reviewed Signature's underwriting and credit culture, and it clearly matches ours. They are very credit-focused.

With that said, that's the conclusion of my remarks, and I'd like to open it up to the audience for any questions.

[Operator Instructions] Your first question comes from the line of Justin Crowley with Piper Sandler.

A lot of common ground here between the two franchises you laid out, and not the least of which being the litigation business. And I know it's quite a bit smaller for Signature, but wondering if you could talk through a bit, what that vertical looks like for them in terms of the client makeup, how it's similar or even not similar to Esquire? And then also just their underwriting process. I know you guys have a unique and tailored process there. So how would you compare the two?

Excellent question, Justin. From just a concentration standpoint, Signature has about 16% of their deposit base in what we deem litigation deposits. They're primarily contingent fee plaintiff law firm, IOLTA, escrow and operating accounts. And they have a much smaller percentage, 2.5%, in litigation loans.

But Mick and his team clearly understand this vertical. They clearly understand the value of the plaintiff law firm market and the peripheral businesses, things like claims administrators and third-party administrators that manage and pay out on mass torts and class actions. They have a focus on lending. I think, hopefully and humbly, that's where we can be a little more helpful, overlaying our credit underwriting and admin process and years of experience onto their platform and their management and their lending staff.

So they understand it. They get it. We're not smarter than them. Maybe we're a little wiser after doing this every day for 20 years. We certainly have a little more experience with it, but they get it. They clearly get it. They get the upside, they get the focus and they understand it.

And most importantly, they've been in the Chicago market and in the Midwest market their entire careers. Mick is about my age, a little bit younger and maybe a little more handsome, too. And at the end of the day, he understands and his team understands commercial lending. And law firm lending is commercial lending.

Okay. That's helpful. And then as far as -- I mean, you folks have always been pretty clear on your overall growth targets. How does that look with the combined balance sheet? And then also looking specifically at that litigation vertical, I think in the past, you guys have talked about in that 30% to 40% range. Is that still a reasonable way to think about growth in that vertical?

Yes. So we see our growth in the high teens. I know you have us pretty near the 20% growth for next -- for this year. Mick and his team have clearly demonstrated their ability to grow their franchise in the low teens, let's call it conservatively high single digits recently. You put those two together at a high level, and at a minimum, you're growing at 15% in round numbers before you begin to leverage a litigation vertical. And not only a litigation vertical, but the scale and resources of both entities together, along with the scale of a larger balance sheet and more capital.

And specifically, when we look at the litigation vertical, growth has accelerated for us over the last several years. And it's not by chance. 3 years ago, 3.5 years ago, we went out and hired regional business development officers in key cities to help grow this vertical. Why did we do that? Because we built a digital CRM platform and database with all the law firms in the country and took that and started to do digital marketing across the country to all these law firms, of which there's about 50,000 of them in the country that are plaintiff-focused.

So this crescendo has built to a platform that over the past 2 years, grown somewhere between 30% and 40% pre-pro forma merger of Signature. We see that to continue to grow at that pace, God willing, maybe accelerate. We see the model clearly working, the model being a digital marketing platform, coupled with boots on the ground in major cities, along with tripling our presence at state and national and local trial association events so that we can see our clients and prospective clients face-to-face at their events, along with our -- what I would consider a thought leadership on lawyer IQ, which clearly demonstrates to the litigation marketing community that we get what they do and we care what they do. So yes, I see growth continuing, and I see concentration or diversification in the litigation vertical increasing over time.

Okay. That's helpful. And then as far as shifting gears, I guess, a little. Just as far as the loan dispositions, you seem pretty well protected there, just given the variable consideration. But can you give a little more detail on what those assets look like? And then from what you gathered through diligence, how do you get confident that the exposure there or really anywhere else is ring-fenced around this pool of loans?

Sure. So the number is $70 million. It's in the deck. It's only a couple of loans, 4 loans. That's very easy to get your arms around. Signature did an outstanding job on collateral. There's a lot of collateral in these loans, and there's a lot of value in the collateral. They've already engaged a third-party broker with extensive experience in the Chicago market. The process for them is going very well. And if I were a betting man, and I am, I would bet on Mick and Bryan and Kevin to resolve these and get them done before the deal closes. And I see them as executing well on these credits. Other than the Board of Signature and the executives of Signature, their biggest fan for resolving this as close to par as possible is me.

Your next question comes from the line of Tim Switzer with KBW.

Yes. I appreciate all the color you've already provided on it, the opportunity here. But with the market share growth opportunity in Chicago, can you quantify that in terms of like, loan balances? And like what have been the challenges in this market for Esquire so far?

Great question. Our challenge is relationships, which the 3 executives on the other end of the line that are my business partners and our business partners, Mick and Kevin and Bryan, spent their entire career in the market doing relationship banking on the commercial side. They know the who's who in the market. They are very plugged in. They know the commercial business as well. They know the law firm market very well.

Our failure is their success. And when we put the 2 companies together, we see tremendous upside in that market. When your choices as a banker and a lender and a business development person are a vertical that is double the spread and the return of a normal commercial lending and depository relationship, it's pretty easy for us as bankers to focus in and hone in on that and make it a priority.

These projections that you have here at 23% accretion assume no revenue synergies that we're going to get out of the Chicago market and Midwest market. They are taking -- as you probably know, but I'll say it -- these are taking our projections that you have because we're a public company and our projections of Signature and putting them together as is. As is, with no revenue enhancements, this is 23% accretive to 2020 (sic) [ 2027 ] earnings per share.

Yes, that's very helpful. And Signature looks to have a pretty strong deposit portfolio. Can you provide some color on like, what is the average depositor -- like, what does the customer base look like there? How sticky is it? What's the average account size, things like that?

I'm going to give you the same answer I gave you about us when COVID hit. COVID hit, they are, by definition, a community bank. They're under $2 billion. So was I. We're probably the same size at the same time when COVID hit. They have commercial customers. So they have deposit concentration, just like we do. It's not a consumer bank. And they had basically no customer runoff, just like us. They are relationship-focused bankers. Their deposit base is extremely sticky. Their customers stay with them through thick and thin, including COVID. And a lot of their larger deposit customers are lender -- are borrowers of theirs for full relationship banking and/or shareholders of theirs and the like.

So they have -- I think we've done a really good job over our 20-year history, servicing our clients and making sure they have access to not only key decision-makers, but the executives at the company at a drop of a hat. And I would say that Mick and his team have done exactly the same, even though we didn't know each other.

Interesting. Okay. And then, how large of a bank can your infrastructure currently support? Like are there any investments needed on the tech side for the core? And then on the core, like when is the conversion planned? And are you guys on the same providers' products?

So I'll start with the last question. We are on Fiserv. No pun intended, Fiserv, Signature, the old CBS commercial banking platform. They are on Jack Henry. We are going to -- at this point, our plan is to convert. I don't see any impediment to it, Jack Henry to Signature. Signature -- Fiserv's Signature banking platform is a strong commercial banking platform and really serves us well for our main vertical, which is IOLTA deposits for law firms across 40 states that we're authorized to take it in and about 30-odd states that we do take deposits in. So that's a good reason for choosing that platform. We see the core conversion optimistically late 2026. Realistically, first quarter of '27.

And no, I think both companies have done a really good job on infrastructure and people. Ironically, when we and the senior management groups met several weeks back in Chicago, they are as focused and as proud of what they built over 20 years as we are. They have great people with a great focus. They act as business owners and partners to their company. They don't act as employees. Most of them have been there the entire 20 years. So they are bringing a great talent and employee base to our company. We, I know, are bringing a great talent base and business partners to their company. The key employees and more really care about what we're doing and treat this much more like a business they own than like an employee clipping a paycheck and going home after an 8-hour day.

Good to hear. Okay. And then the last question for me. I hate to ask this on the day of the deal announcement, but I mean previously, you guys have been holding some excess capital for an M&A deal. After you close, you're going to continue to have excess capital, and the pro forma projections looks like that capital should build thereafter. So I mean, what are the plans for this? Is it dividends, buybacks, maybe more M&A? Are you able to use it for accelerating growth? How should we think about that?

So I think we have excess capital, too, but everybody should pay attention to the total risk-based capital, not the leverage ratio. Most people focus on leverage, which is, generally speaking, capital to assets. And everyone sees excess. But we are 2 commercial banking franchises. Our risk-adjusted assets, commercial assets are 100% risk weight is what everybody should focus on. And that's what you should keep your eye on. And we will continue both franchises to leverage our commercial focus. So that will be the critical ratio to keep the eye on.

What do we plan on doing? We plan on having a drink at the end of today, to start. Then we plan on focusing on getting approvals, which are regulatory filings and SEC filings, getting our proxy done for our shareholders, getting our S-4 effective, getting the deal closed. Along the way, planning for interim processing. Along the way, planning for conversion. And then along the way, longer than conversion, planning on making sure our cultures are intimately aligned because that's how we're going to significantly outperform the banking market by any metric.

What's next? That's a mouthful and a plateful and more. So we can talk about what's next and raising capital maybe after we close the deal. But I do appreciate your question. I do take it as a compliment, Tim. Thank you.

Your next question comes from the line of Steve Moss with Raymond James.

Maybe just my first question here. Kind of curious, just in terms of how Signature operates in terms of the types of commercial loans they do? How much -- is there some specialization on the lending side? Is there an SBA component? Just any color you can give there.

Yes. I mean, I would describe it the way Mick described it to me when I first met him and the way he continues to describe it since we've known each other probably about a year or so and spent some time together. They are very C&I focused. I know you know that, and commercial focused and owner-occupied CRE focused. I wouldn't characterize it -- well, if you compare and contrast the two franchises, we are very focused in the litigation vertical, as you well know. We are, therefore, concentrated. I don't think that's a problem, but we are concentrated also. And their middle market focus across their client base is relationship focused.

My best example to you is from my bank. If I go out and I want to do a local piece of commercial real estate, specifically multifamily, it's a commodity in our market. From my size, it doesn't really come with deposits. And therefore, it's a one-sided loan, right? I get to book a loan and figure out how the hell I'm going to fund it.

Signature does what we do, but they do it in the small business, middle market area. They are looking for relationships with commercial entities that throw off strong cash flow and strong debt service and bring good, solid commercial operating accounts to the platform. It's not that I don't have an answer, but they don't have a specific niche, if that's what you're asking me, like we do.

Okay. That's exactly what I'm getting at. I appreciate that there. And then maybe on...

Steve, I don't mean to interrupt. I'm sorry. I also think that's wildly valuable for the combined franchise, not for diversity just from litigation, but for diversity. We, at Esquire, can learn a tremendous amount from the Signature executives and lending team. Whether they are better middle market lenders than us doesn't matter. They absolutely do a better job than us in middle market commercial banking lending. I think we can both leverage and learn from each other, and in a positive way, exploit what we do. When I say we, I mean both companies. Not only in the Chicago market, but what they do in the New York market and in the California market and in the Florida market as we get to know each other and really put these franchises together.

Great. I appreciate that color there. And then just curious here in terms of the Schedule A loans, I heard you say that they're well secured by real estate. Just kind of curious if you can give us any type of industry they're with or just kind of like what caused the issues there?

No, they're commercial real estate secured and -- the problem every banker has with any loan is simple. It's cash flow. That's it. If I have a problem with a [ wall ] loan, it's cash flow related. If you have a problem with a straightforward commercial loan, it's cash flow related. If a homeowner can't pay on their residential mortgage, it's cash flow related. If you can't pay your credit card loan, it's cash flow related. So any problem loan boils down to simple cash flow, all right? And when there's not enough cash flow to service the debt, any one of us, not Signature, any one of us can wind up with a loan that we need to put on either nonaccrual or risk rated a certain way that then we need to resolve and work out. The strength of these loans are the strong collateral base.

Right. Okay. Appreciate that there. That's helpful as well. And then just in terms of -- as you're thinking about the growth here going forward, obviously, a larger balance sheet on a combined basis. I'm assuming a lot of it is going to be business as usual, but does this mean maybe on the litigation side, you could add more larger litigation loans? I know you have your partnership out there, but just kind of curious, we kind of see that just dive in that a little deeper.

Sure. So as you know, you've been following us for a while. We didn't get to 70%, 70-plus percent overnight. It grew to that point. Growth has accelerated significantly. The way we look at this is that we can expand not only in the Chicago Midwest market with the direct impact of Signature Bank, and more importantly than the bank, the people and their experience and their knowledge of the market, which is invaluable. But we can expand our business development presence in other markets and/or add business development teams around the areas where we've hired business development officers.

So in order to continue in a positive way to exploit this vertical and grow -- and selfishly, yes, great returns. Unselfishly, the slide clearly shows it in the deck. We are actually helping law firms invest in their companies and grow their companies, which helps their clients, which are injured claimants. So I won't get on my soapbox like I do sometimes. I'll stop there.

But this market is still underserved, immature, has a tremendous amount of room for growth. We at Esquire live it and breathe it every day. It is our focus. And a larger balance sheet, more capital, more resources and people and technology, more focus around business development, whether it's individuals or teams or both, coupled with the Midwest and the Chicago market. You put all this together, and we hope we're right. I certainly pray and cross my fingers that we're right, but we believe that we can accelerate growth into this market with the help of our friends at Signature and their franchise, where there is a lot more runway in front of us for that growth than if we do it on our own.

We could do this on our own. We can continue to grow. It won't be at the pace I think we can grow at the combined entity. It won't be the immediate impact of the resources. And at some point, 70% becomes 80%, and 80% becomes 90%. And at some point, someone -- I don't know who -- investors, regulators, Board members, rightly so, start to instead of complementing us on our vertical and concentration, start to criticize us, right? And our job is to be years ahead of that criticism.

That concludes our question-and-answer session. I will now turn the call back over to Andrew Sagliocca for closing remarks.

Well, I want to thank everybody for joining us today and giving us their valuable time. Again, I'll end on this note. The combined entity, a premier national banking franchise, will be approximately $4.8 billion in assets. I believe it's a best-in-class management team on a combined basis. I believe it allows both companies to leverage their brand and their wisdom in what they do and complement each other on their commercial banking operations, and we can learn from each other. It certainly unites two highly talented management teams. It allows us for expansion in the Chicago market, scale, diversification, industry-leading profitability, accelerated shareholder value creation.

I'll end with a piece of Mick's quote, which says, as we celebrate, I'll say, our 20th anniversary since we're both on it, this merger will provide our shareholders with enhanced liquidity and opportunity to create greater value in the years ahead. That goes for both shareholders, not just Mick's. And we want to welcome Len and Mick to the Board. And we absolutely want to welcome Mick and Bryan and Kevin, their management team and their employees to the combined entity. And I think onwards and upwards, and the sky is the limit for us. Thank you, everybody.

Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.