埃斯奎尔金融 (ESQ) 2026年第三季度财报电话会议：Signature合并与2027年每股收益指引lg...

Esquire Financial Holdings（NASDAQ：ESQ）发布了其自2026年8月1日完成与 Signature Bank 合并后的首份季度业绩。该季度包含了 Signature 两个月的运营活动。

核心要点

• 2026财年第三季度 GAAP 净利润为1750万美元，即摊薄每股收益1.57美元。扣除合并费用和离散税收收益后，调整后净利润为2360万美元，即摊薄每股收益2.12美元。
• 收购 Signature 使合并后的公司资产规模达到48亿美元，贷款总额达34.3亿美元。这项耗资4.66亿美元的收购在第一天就使每股有形账面价值增厚了10%。
• 内生贷款同比增长4.97亿美元，增幅为32%。诉讼相关贷款在本季度增加了1.6亿美元，达到14.6亿美元。
• 报告的净息差为5.74%，而管理层计算的标准化净息差约为5.68%，以反映 Signature 整季度的运营情况。
• 管理层预计2027年贷款增长约5亿美元，相当于约14%的增幅，并给出5.70%-5.75%的净息差指引。
• 基于所陈述的贷款增长、净息差、手续费收入、费用和税率假设，管理层预计2027年摊薄每股收益约为9美元。

关键财务数据

业务与运营表现

与 Signature 的合并在季度内增加了约14亿美元的贷款和16.5亿美元的存款。这也优化了 Esquire Financial 的资产负债表多元化程度：诉讼相关贷款占总贷款的比重从上一季度的67%降至42%，而诉讼相关存款占总存款的比重从79%降至54%。

若扣除交易影响，内生贷款同比增长4.97亿美元，增幅为32%。第三季度诉讼相关贷款增加了1.6亿美元，年化增速达49%，使该资产组合规模达到14.6亿美元。

管理层指出，芝加哥及更广泛的中西部地区是商业银行业务以及诉讼相关工商业（C&I）贷款的拓展机遇。Signature 在原告律所市场已拥有存款合作关系和本地资源，但管理层提醒称，转化这些律所客户需要较长的销售周期。

内生存款同比增长4.47亿美元，增幅为24%。季度资金成本（包括活期存款）为113个基点。表外扫款余额总计7.76亿美元，其中约有2.55亿美元可在需要时用于流动性供应。

支付平台服务了9.4万家小微企业客户，通过1.52亿笔交易处理了约105亿美元。扫款余额带来的行政服务支付手续费收入为110万美元。

信贷质量保持稳定。公司报告称没有发生重大冲销或显著评级下调。该银行的一级杠杆率为11.2%，而总风险资本比率为13.65%。

管理层业绩指引

管理层提供了以下2027财年的假设与目标：

净息差展望参考了管理层引用的 FHN Financial 模型中的利率走势：再加息25个基点，随后维持利率稳定直至2027财年第三季度，并于2027财年第四季度开始降息。

合并后贷款组合中约有60%为浮动利率贷款，而收购前这一比例约在85%-90%。管理层表示，合并后的公司仍将保持资产敏感型特征，并估计加息100个基点将使净利息收入增加约6.7%。

风险与关注领域

• Esquire 与 Signature 使用不同的核心银行系统。原 Signature 客户计划于2027年4月从 Jack Henry 系统迁移至 Fiserv Signature 系统。
• 整合工作不仅限于核心系统的转换，还延伸至管理系统、CRM、核保、贷款发起、存款平台及企业文化等方面。
• 管理层将每年5亿美元的贷款增长称为一项重大执行要求，因为诉讼相关借款人通常仅提取约50%的名义承诺额度。
• 较大型的贷款机会预测难度较高，限制了管理层做出这些机会会持续出现的假设。
• 2027财年的净息差展望部分取决于所引用的利率假设以及 IOLTA 存款利率的潜在变动。
• 股息决策将权衡股东分红与增长所需的资本，并特别关注总风险资本比率，因为工商业（C&I）贷款具有100%的风险权重。

分析师问答要点

芝加哥业务扩张：管理层认为在传统商业银行、精选商业地产以及诉讼相关工商业（C&I）贷款方面存在机遇。Signature 的现有关系可能有助于业务拓展，但原告律所已在其他银行开立账户，需要较长的客户转化流程。

购买会计处理：管理层表示，5.68%的标准化净息差并非购买会计调整的结果。可增厚贷款调整额约为1600万美元，平均期限约三年，预计对净息差的贡献为13个基点。

流动性配置：管理层预计内生贷款和存款增长将吸收部分可用流动性。公司还打算保留可抵押给联邦住房贷款银行或美联储贴现窗口的证券。

投资支出：Esquire 计划在整合两家公司的同时，继续投资于业务开发、客户关系管理、信贷人员、技术和数据。

业绩电话会议完整文字记录

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完整财报电话会议逐字稿

管理层陈述

Operator

Hello, everyone. Thank you for joining us, and welcome to Esquire Financial Holdings' Q3 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.

Andrew Sagliocca

Thank you, Kenneth. Good morning, everybody. I'm joined in my office by Michael Lacapria, our SVP and CFO; and Eric Bader, our EVP and COO.

I'd like to start the call by thanking and welcoming everybody, including our investors, analysts, Board members, managers and employees, including our new business partners from our new Signature division out of Chicago. I'm going to start the call with some high-level thoughts and comments, then turn the call over to Michael for a financial update, and then we'll address any questions from those on the call.

During the quarter, we successfully closed the Signature Bank merger on August 1, '26, which diversified our loan portfolio and funding sources. And we also continued to show strong organic growth and performance on a combined basis. At closing, Signature had total assets, loans and deposits of approximately $1.9 billion, $1.4 billion and $1.7 billion, respectively. The combined results for Signature for the third quarter includes only 2 months out of the 3 months of Signature activity.

Most importantly, the merger unites 2 highly talented management teams and employee bases with a strong client relationship and market expertise, positioning the combined company for continued industry-leading growth, performance metrics and enhanced success.

Regarding the conversion, our core system conversions are in progress and targeted for April 2027. There has been no material client attrition to date. Our growth and performance metrics remain materially unchanged from announcement, with certain performance metrics improving as noted in our earnings release.

A couple of quick highlights. Excluding the merger, we still experienced strong organic growth in loans and deposits over the past 12 months, totaling approximately $0.5 billion in loan growth and about $450 million in deposit growth. Also on a linked quarter basis, we continue to demonstrate similar organic loan and deposit growth as of the 12-month period. We have solid credit metrics, asset quality and reserve coverage ratios. And when we exclude the merger expenses and certain discrete tax benefit items in the tax line, our adjusted diluted earnings per share was $2.12, and our adjusted return on average assets and return on average tangible equity was 2.34% and 23%, respectively.

The Signature merger, coupled with our combined asset size, enhanced resources and diversified loan and deposit platforms, positions our company for continued strong growth and performance, and we believe we will exceed our initial earnings expectations when we announced the merger on March 12, 2026.

With that said, I turn it over to Michael to give you his financial update and financial highlights. Michael?

Michael Lacapria

Thank you, Andrew, and good morning. I will provide a brief overview of our third quarter 2026 financial results as highlighted in our earnings release and investor presentation published earlier this morning. Like Andrew said, please note that this is our first quarter reflecting the post-merger combined company and the results include 2 months of Signature's activity from the August 1 closing date.

This successful merger closed at a purchase price of $466 million, which is 10% accretive to tangible book value on day 1, giving rise to a combined company that is $4.8 billion in assets, $3.4 billion in loans, $4 billion in deposits and $492 million in tangible equity, net of $247 million in goodwill and a $47 million core deposit intangible as of September 30.

So let me start with net income. For the third quarter, we reported GAAP net income of $17.5 million or $1.57 per diluted share. These results included $8.9 million of pretax merger expenses, which is $7.1 million net of tax, and $938,000 of discrete tax benefits related to share-based compensation. Excluding these items, our adjusted net income is $23.6 million or $2.12 per diluted share, which exceeds consensus estimates. This compares to an adjusted net income of $14 million or $1.60 per diluted share on a linked quarter basis, representing a 69% increase. Our adjusted returns on average assets and average tangible equity were 2.34% and 23.1%, respectively, for the quarter.

These remain industry-leading metrics while we continue to invest in our current resources to support future growth and maintain excellence in client service that our customers have come to expect.

Our net interest margin for the quarter was 5.74% compared to 5.96% for the trailing quarter. That being said, our normalized net interest margin was approximately 5.68% or 6 basis points less than the full quarter's result since Signature was included for 2 of the 3 months in the current quarter. This decline from prior quarters appropriately reflects the change in the combined asset and funding mix following the acquisition.

Loans increased $1.5 billion or 80% to $3.43 billion from June 30, of which $1.4 billion was attributable to the Signature merger, while the remaining increase was primarily attributable to organic litigation-related loan growth of $160 million or 49% annualized, bringing our litigation book to $1.46 billion. Our litigation book now represents 42% of loans as compared to 67% in the trailing quarter, provided for by the expected diversification benefit of the combination. On a year-over-year basis, organic loan growth was $497 million or 32%.

As it relates to our litigation loan portfolio, we continue to see strong organic growth, healthy client activity levels and a tremendous opportunity in the untapped Midwest market. The litigation vertical remains a primary strategic focus, which is a key source of low-cost core funding to the bank that supports asset growth across the balance sheet.

Deposits increased $1.8 billion or 83% to $3.8 billion from June 30, of which $1.65 billion was attributable to the Signature merger and the remaining $147 million was primarily organic litigation-related deposit growth. From the June -- from the August 1 closing date, deposits increased $55 million or 8% annualized. And on a year-over-year basis, organic deposit growth was $447 million or 24%. Our litigation-related deposits concentration decreased from 79% to 54% as the merger diversified our exposure as expected.

Our cost of funds for the quarter, including demand, was 113 basis points. Off-balance sheet sweeps remain a reliable source of liquidity at $776 million with approximately $255 million or 33% available for liquidity if needed. Administrative service payment fee income on these balances totaled $1.1 million for the quarter. Total liquidity, including cash, off-balance sheet sweeps and other borrowing capacity, was approximately $1.6 billion as of quarter end.

Turning over to credit. Credit quality remains solid. Our allowance for credit losses remained at 1.3% of loans, consistent with the prior quarter, and we have 6 nonperforming assets totaling $9.7 million, representing 20 basis points on total assets. The 4% increase in NPAs from the trailing quarter is due to the merger. There are also no material charge-offs or significant downgrades to report.

Noninterest income increased $1.5 million or 24% as compared to the trailing quarter to $7.9 million, representing 13% of total revenue. Our payments platform continues to be a meaningful contributor to earnings and client engagement. During the quarter, we supported 94,000 small business clients nationwide, processing approximately $10.5 billion in payment volume across 152 million transactions.

Operating expenses increased $14.9 million or 71% as compared to the trailing quarter to $36 million, which is attributable to normal Signature operating expenses of $5.2 million, incremental merger expenses of $7.8 million and $1.8 million of core deposit intangible amortization. Excluding merger expenses and CDI amortization, the adjusted efficiency ratio was an industry-leading 41.1%. Merger expenses incurred inception to date was $11.6 million and is consistent with the guidance at announcement date.

Our capital foundation remains strong. The bank Tier 1 leverage and total risk-based capital ratios were 11.2% and 13.65%, respectively, positioning us well above regulatory well-capitalized standards.

Now I'll turn the call back over to Andrew for his remarks.

Andrew Sagliocca

Thank you, Michael, for that thorough update. Kenneth, we're going to turn the call back over to you for the Q&A session.

Operator

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

分析师问答

Justin Crowley

Some noise with Signature in the numbers, but still growth obviously looks really, really good here with the litigation vertical running on all cylinders. And so I wanted to maybe get your thoughts on that vertical and in particular, the opportunity in Chicago, which I know is a big reason for the deal. Just curious what you've learned so far in terms of what had to be done, maybe anything additional that needs to be done to penetrate that market as you bring Esquire's lending model to the Signature markets.

Andrew Sagliocca

Great, Justin. Absolutely. So first and foremost, as you're aware, Signature, Mick and his team in Chicago run an excellent commercial banking platform. So there is tremendous opportunity in the commercial market itself in the Chicago and Greater Midwest area. So we start there by saying that's a market that we can continue to tap and continue to grow non-litigation C&I loans and select CRE, too.

The Chicago market for the litigation-related C&I loans or plaintiff law firms that we primarily bank in our litigation vertical, very robust market, according to our numbers, the third or fourth largest plaintiff law firm market in the country. Signature has done a good job, before we've come along, in penetrating that market on the depository side. They have a small lending book in this market, but they have a lot of contacts.

Mick and Bryan and Kevin, the executives over there and key members of the business development and relationship management team in the lending area have long-standing deep relationships, not only in the Chicago metro area, but in the litigation area. So that's what we've learned since we've announced the deal in March. I think it was March 12 through today. We've spent myself; Ari Kornhaber, who runs our litigation division; Frank Lonardo, who is our Chief Credit Officer and heads up the lending area with Bonnie Dougherty, who's our new CLO over the past year, have spent a lot of time in Chicago with Mick and his team, primarily on the business development side, and they have really strong relationships in the market and with plaintiff law firms that I believe we're going to be able to leverage as we move forward.

I'll end with, because you've heard me say this, Justin, and it has proved itself out on our business development team that we hired prior to announcing the Signature deal. It's a long sales cycle with plaintiff law firms. They're all banked. They have to be banked. So their operating and escrow accounts are already banked somewhere. So the goal is to get them over to Esquire and attract them not only with our lending products and what they see as capital in the form of loans we give, but also attract them over because we understand the market and understand their depository needs, either/or or both.

Justin Crowley

Okay. Got it. That's super helpful. And then I feel like I kind of know the answer here, but just to confirm how you're thinking about growth looking out here, somewhere in the 15% to 20% annual growth. Is that still the right way to think about the combined company going forward here?

Andrew Sagliocca

You should think of the combined company around 15%. So we're modeling '27 at about $0.5 billion of loan growth. Somebody may say that's conservative. You just did $0.5 billion ex Signature. But we may be able to print those type of numbers. But it's anything but easy. It's a big heavy lift to get $0.5 billion worth of growth done because it usually means we're double or more in notional originations to get that done because our stats on our lending side for our litigation-related loans clearly plays out at about 50% draws on the notional balance. So we're comfortable with $0.5 billion worth of growth, which is about 14%. So that's a good way to think about growth going into '27.

Justin Crowley

Okay. Got it. And then just pivoting a little, as far as the margin, I know it's some moving pieces with Signature only in there for 2 months. And so if we think about that 5.68% on an adjusted basis, how do you see that trending from there? I think you previously talked about the margin settling out in the 5.40% to 5.50% range. Obviously, the rate environment has shifted a fair bit since then. So just kind of curious for your updated thoughts there.

Andrew Sagliocca

Yes. I mean we're using FHN Financial's model as of September 4, '26. They're looking at one more rate increase to 7.25. If we're looking at prime, if we're looking at Fed funds from 4% to 4.25%, which takes prime from 7% to 7.25%. And then they hold steady through the end of the third quarter. And then they have rates coming down 25 basis points in the fourth quarter and the first quarter of '28. So with that said, we're looking at a margin of about 5.70%, maybe as high as 5.75%. So a pretty stable margin from what we printed in the third quarter, even though Michael gave you the adjusted number of, I think, 5.68%.

Justin Crowley

Okay. And that 5.70% to 5.75%, is that kind of where you think -- where it reaches? Or are you giving a full year number for '27?

Andrew Sagliocca

I'm looking at '27 saying we're going to be somewhere between 5.70% and 5.75% for '27.

Justin Crowley

Okay. Perfect. And then maybe just one last one. I think on a combined basis, you're running with what I think you'd probably describe as some excess liquidity, which I know would have also been the case stand-alone as well. How do you see that cash position trending? And what would be the sweet spot if you're able to deploy that liquidity?

Andrew Sagliocca

I guess the best answer I can give you is we're looking at about 14% to 15% growth. In order to achieve $0.5 billion worth of growth, we're going to have to raise about $0.5 billion worth of core deposits, maybe a little less $400 million, $450 million. Deposits always lag loan growth, but the deposit base is higher than the loan growth because our loan-to-deposit ratio is about 86%.

So we see both of those commensurate, $0.5 billion worth of loan growth, about $400 million, maybe a little bit more worth of deposit growth. That will deploy some of the excess liquidity. But we're not sitting on a lot of excess liquidity when you look at cash, and we prefer to grow naturally with core deposits and invest it in loans.

And obviously, for liquidity purposes, we'll continue to stay in the bond market because they're pledgeable at the Federal Home Loan Bank and the Federal Reserve discount window. So we maintain a strong liquidity level. But that's how we see it. But we are -- we've played out '27, and we believe we're comfortable with where earnings is coming out in our revised numbers, along with our expense base and our other fee income base. So if that's something you want to talk about, we're open to talking about '27 and how we view it.

Operator

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

Timothy Switzer

Yes. So my first one, I'm sorry if you already mentioned this, but am I -- I'm trying to understand from the press release, the 6 basis points within the NIM that you guys are talking about, was that the purchase accounting benefit from closing Signature?

Andrew Sagliocca

No. If you think about it, our margin was around 6% and their margin was south of 6%. And mathematically, they're included in our margin for 2 months, not 3. If they were included for 3 months on a pro forma basis, Michael and I see the margin coming out at about 5.68%, give or take, a couple of basis points either way. So it has nothing to do with the loan mark. It has nothing to do with the securities and the accretion related to loans and securities. It has everything to do with them being mathematically included in the margin for 2 out of 3 months.

Timothy Switzer

Okay. Okay. That makes sense. So what was the purchase accounting benefit on either a dollar or basis point basis?

Andrew Sagliocca

The purchase accounting -- well, the purchase accounting on the securities was the mark, I think, Eric, was about $64 million.

Eric Bader

Yes.

Andrew Sagliocca

And we wound up liquidating most of that at market and buying back in opportunistically at market. So we're not tracking the purchase accounting on securities, Tim, which was a material piece because now it's embedded in the bonds that we want to own as a $5 billion company. So Eric's goal liquidating their position was simple. We're a $5 billion bank. We want to own larger blocks that are easier to pledge at the home loan bank or the discount window. And at the same time, we wanted to buy new issuances with shorter duration. That was the goal.

So Eric expedited trading out of those bonds at the purchase accounting mark and buying into new bonds. So what that leaves us with is the loan mark. So the loan mark -- the accretable loan mark was about $16 million. And its average life is about 3 years. So it might impact margin by...

Michael Lacapria

It's 13 basis points.

Andrew Sagliocca

Yes. But again, that's a 3-year mark. So we'll be living with that for 3 years as we grow.

Timothy Switzer

Okay. So that's 14 basis points to the NIM this quarter. Should we expect a similar amount in Q4? Is it a little bit higher once you get the full quarter impact?

Andrew Sagliocca

You should expect the NIM to be around 5.70%, 5.75%. And if we surprise on the upside, then I'll be as surprised as you, and we'll obviously change our guidance. But that's a pretty strong NIM considering we all believed on our side, management when we announced the deal that we'd be operating somewhere in the high 540s or low 550s. So it's been a great run to the closing. We were opportunistically, like I said, able to trade into new issuances of bonds that made us very comfortable. And the purchase accounting came out materially close to what we thought it was going to be when we announced the deal.

Timothy Switzer

Yes. No, it's all good to see. What kind of deposit beta assumptions do you guys have embedded within your guidance? And can you also talk about how the pricing power you have on the loan side if rates continue to move higher from here?

Andrew Sagliocca

Yes. So about -- at this point, with the diversification in the loan book, I think it's about 60% of the total loan book is variable, right, as opposed to probably close to 85% or 90% pre-acquisition, but it's 60% now. As rates move up, which, again, our guidance that we're using is FHN Financial. So we only see rates moving up on Fed funds 25 basis points more according to their projections, which is minimal for anybody to model if we're going to use that.

So the reason I keep giving guidance around 5.70%, 5.75% is we've already had one rate move, and that's played into where our NIM is winding up now at about 5.68% adjusted. And if there's another rate move, I know Eric Bader is going to come in my office and tell me that it'd be prudent to move up our IOLTA rates in certain material states, which would be prudent for those states that we operate in. We want to be a good corporate steward in the states we operate in and have IOLTA powers in. So we're comfortable with the margin hanging around 5.70%, 5.75%, considering we only have one more rate increase built into our models.

And again, like I said to Tim, if at any point on the call or after the call, you want to talk about '27, both Michael and I have modeled that out and are comfortable with the revised guidance, which is why we put in our earnings release that we believe we're going to exceed the guidance we printed on March 12 with the deal.

Operator

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

Stephen Moss

So maybe just on that subject of looking out to '27 here, I know you have the integration or the systems conversion and stuff coming up next year. Just kind of curious how you guys are thinking about expenses with regard to the moving parts there. And then also just kind of curious what are your thoughts on additional investments in both franchises as you put them together?

Andrew Sagliocca

Excellent. Excellent. I'm glad you asked. I really am because I'm going to start the way I never start, which is with what we believe our diluted EPS is going to be in '27. And I want to do that on this call, Steve, because as you know, not only is September not a clean quarter. The obvious noise is the merger charge. But there's only 2 out of 3 months of Signature in there. So we haven't even printed a full quarter combined, which, as you know, is going to be the fourth quarter.

So the way we're looking at '27 is approximately $9 a share. And if you walk through the components of that, you're looking at about $0.5 billion worth of loan growth, starting with about a $3.5 billion starting point at the end of December. Again, you're looking at about a 5.70%, 5.75% margin. On a combined basis, we're looking at about $33 million, $34 million of fee income. And on a combined basis, we're looking at about $138 million to $140 million of noninterest expense. And our run rate on the tax side is about 28.5% as long as we don't have any discrete type items and option or restricted stock type exercises. On a normalized basis, we're modeling that tax rate at about 28.5%. So that comes out to about, give or take, $9 a share on diluted EPS for '27.

And you hit it right on the head, Steve. You know us long enough. We're going to continue to invest in resources, and that is people and technology because at these kind of growth rates, starting with a $3.5 billion loan book and a $4.8 billion combined asset base and size for the company, printing about 14% loan growth or $0.5 billion, which again means we're going to print about $1 billion or more of notional to get about $0.5 billion worth of loan growth.

We are going to continue to invest in business development, relationship managers where they're managing the ongoing clients. We're going to continue to invest in the lending area, especially on the C&I side, both litigation and commercial, where we see growth. We have and Signature had a great commercial real estate team. We think that the combined team will be able to handle the growth in that portfolio on a combined basis across those 2 regions. And obviously, we continually invest in technology, which when I say that, it could be as simple as investing in data, which we continuously do to make sure that our digital marketing platform is leading and in front of our business development officers nationally around the country.

Stephen Moss

Appreciate all that color there. I mean, I guess just kind of as you guys continue to invest and grow here and you put up a really good quarter here in terms of growth, it feels like the loan growth guidance may be a little bit conservative, maybe just getting a little spoiled here with the numbers you're putting up. But if the pipeline is strong, I know you put on a lot this quarter. I hear you in terms of $1 billion in commitments. Is there anything -- is that just you guys being conservative here on the loan growth? Or like are there maybe a few takes that we're not thinking of?

Andrew Sagliocca

Well, I think in any year or any quarter, we always have a minority of larger opportunities and a majority of smaller opportunities. So I can't always count on the minority of larger opportunities happening on a continuous basis. I am very comfortable with -- when I say the smaller loans, those loans, call it, if I had to pick a number, I'd say $25 million in notional and below, and those loans that are greater than $25 million in notional and above. I can't build and run a company counting on those type of opportunities over and over again.

Am I being conservative? I think I'm being realistic with $0.5 billion worth of loan growth. I think we just closed the deal on August 1. We, as a combined entity, where now we have not only doubled the size of the company effectively, but we've doubled the employee base. We have not gone through system conversions. Core system conversions isn't the only thing that any bank has to focus on as they look towards April '07 (sic) [ April '27 ] for conversion. There are management systems we need to convert. There are CRM platforms and loan underwriting platforms and deposit and loan origination platforms. There's culture we have to align.

There's a lot of work in deals that goes unnoticed that the numbers don't reflect. So I don't think we're being conservative. I think we're being realistic. I think 14%, 15% growth is a great print. I think $9 a share, give or take, is a great print right after the deal. And what I don't want to do is overpromise on a call like this, knowing how much work we have to do that has nothing to do with originating the next loan.

And as you know, as we get through the fourth quarter and into the first, if we're feeling better about growth and we think $0.5 billion is on the conservative end, people like you and Tim and Justin will be the first to know.

Operator

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

Unknown Analyst

A few questions. One, on the system conversion. Are the 2 companies on the same core operating system? Or are you on different systems that makes this even heavier lifting?

Andrew Sagliocca

We are on Fiserv Signature. They are on Jack Henry. So we are on 2 different core systems. Not sure if it makes it a heavier lift. It obviously does, compared to us being on the same platform. But Jack Henry is Signature, and we are on Fiserv.

Unknown Analyst

Okay. And just which one is going to be the winning system?

Andrew Sagliocca

Fiserv. The Fiserv Signature system will be what our new clients at the former Signature Bank will be converted to.

Unknown Analyst

Okay. Great. Looking out, say, a year to 2 years, is it feasible to take out some of the asset sensitivity of the bank? Or will this -- the combined entities always be asset sensitive?

Andrew Sagliocca

The combined entity will always be asset sensitive. Starting with today, obviously, our concentration is less. It's about 60%. And I think 100 basis points up, we're looking at about a 6.7% increase in net interest income, which we put in the investor deck on Page 11.

Unknown Analyst

Okay. All right. And then last question on the combined company. Given the loan growth that you see, what would be the appropriate payout ratio on the dividend looking out?

Andrew Sagliocca

That's a good question, and that's a discussion we need to have at the Board meeting. We've traditionally paid out about 10% or 12% dividend payout ratio based on earnings. That's our traditional premerger ratio that we reevaluate going into the end of the year and typically announce in early the following year. With these growth projections, our focus is not necessarily on tangible capital to assets or the leverage ratio. Our focus is on our total capital ratio since we are heavily weighted towards C&I loans, which are 100% risk-weighted.

So when we look at dividends, we're not only looking at a dividend payout ratio, we're looking at capital preservation as we balance it between using capital towards growth or using capital towards dividend with a keen eye on the total risk-adjusted capital ratio. Is that about right, Michael?

Michael Lacapria

Sounds right to me.

Operator

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

Andrew Sagliocca

Great, Kenneth. Thank you. I want to thank everybody on the call. I know that we have some investors and analysts, obviously, Board members, managers, employees. I hope our friends and our new business partners at Signature in Chicago were able to join us. I want to congratulate everybody, our Board, our management team, our employee base. This was a very heavy lift. As you could imagine, the bank prior to the acquisition was about a $2.7 billion bank. So again, effectively, we not only doubled the size of assets and loans and deposits, but we doubled the employee base.

As you're aware, Chicago is about 850 miles away from New York. So there's been a lot of traveling back and forth between management group and employees to make this happen and also plan for the system conversion and scheduled at this point for April '27. So I just want to take a moment to thank all of our employees for their focus, their care, their dedication and their diligent and hard work to get us to this point. We are very pleased with the company's combined performance, and we are very positive about our earnings expectations and performance as we look forward.

So thank you, everybody, and thank you, Kenneth.

Operator

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

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