Home BancShares, Inc. (HOMB) Earnings Call Transcript & Summary

Greetings, ladies and gentlemen. Welcome to the Home BancShares, Inc. Second Quarter 2026 Earnings Call. The purpose of this call is to discuss the information and data provided in the quarterly earnings release issued after the market closed yesterday. The company presenters will begin with prepared remarks, then entertain questions. [Operator Instructions] The company has asked me to remind everyone to refer to their cautionary note regarding forward-looking statements. You will find this note on Page 3 of their Form 10-K filed with the SEC in February 2026. At this time, all participants are in a listen-only mode and this conference is being recorded. [Operator Instructions]. It is now my pleasure to turn the call over to Donna Townsell, Director of Investor Relations.

Thank you. Good afternoon, and welcome to our second quarter conference call. With me for today's discussion is our Chairman, John Allison; Stephen Tipton, Chief Executive Officer of Centennial Bank; Kevin Hester, President and Chief Lending Officer; Brian Davis, our Chief Financial Officer; Chris Poulton, President of CCFG; and Scott Walter of Shore Premier Finance. Home BancShares reported another solid quarter, generating a record net income as adjusted of $128 million, while significantly expanding our balance sheet and maintaining strong profitability. Loan growth, stable margins and improving book value, underscoring the strength of our franchise. Most importantly, we accomplished all of this while maintaining strong credit discipline and preserving the profitability that has long differentiated our company. Our team is prepared to provide you with more details about the quarter with our opening remarks today coming from our Chairman, John Allison.

Well, thanks, Donna. It's been another quarter come and go. Second quarter of '26 was sheer full of records for the record -- shared lots of records for the record, excuse me. There were a couple of items that I think we should talk about, the ones our merger with our friends with Mountain Commerce. It's evident that some of our merger earnings came through a little earlier and a little stronger than we anticipated as we felt some of the earnings impact in the first quarter. We got to like that. Because this trade was nondilutive and therein lies the benefit of a nondilutive trend, a successful merger is where the two companies should be creating more value together than either company can achieve separately. In our view that many of that is 1 plus 1 should equal 3, not 1.75. With our deal being a 3, both groups immediately start sharing the benefits of their union. And this merger, Mountain Commerce and Home Bank shareholders will equally enjoy the ride together. Perhaps the biggest surprise of the quarter though was a surprising loan growth with a legacy footprint. We were forecasting a negative $600 million in loans and actually had a plus $26 million. That's a $626 million swing on the loan side. As a result, we will no longer forecast next quarter's loan growth. Obviously, we don't do a very good job of that. The problem is that our customers are really a group of outspending little entrepreneurs that are constantly looking for opportunities that we only learn about most of the time we need a funding request. Many of them do a deal on the spot, commit to do a deal on Monday and say, we'll close on authority with cash. The good news is, we know their limits and may know our lanes. Second quarter performance speaks for it sound. During the quarter, we incurred approximately $12.7 million of merger-related expenses. Excluding these expenses, the earnings were and what you're going to get to hear it again, $0.64 and earnings of $128.1 million after tax. That's an 8.4% increase from quarter -- last quarter and almost 12% from $6.30 to 25. In addition, revenue $295 million, up 10.6% from the prior quarter from $266.7 million. Adjusted pretax preprovision net revenue reached a company record of $171 million. When you adjust for the efficiency ratio, it came out 40.46 -- good job by both teams, Mountain Commerce and Home BancShares on the expense side and an adjusted ROA of $2.09 million Stable margin of 4.51, same as last quarter, up 6 basis points from 6.30 to 25. And I said good job for MCB in Home on the expense side. On an adjusted basis, these performance numbers are some of the best our company has ever run I want to thank all our associates for the basing quarter, and that includes our new partners, Bill Edwards and his outstanding Tennessee team. We have completed the conversion of our legacy company in June, and I think it went as smooth and as good as it could be expected. Now on to Mountain Commerce. We stepped up stock repurchase during the quarter. From the first quarter, we repurchased 500,000 shares and this quarter, we repurchased $1.5 million. I said our goal was to repurchase over a short period of time the shares that we issued in the Mount Commerce transaction, and we are already approaching halfway more. On M&A, we're looking at some other opportunities. But with the nonperforming loan that we told you about last quarter, our stock took a drop even though it was a 2%-plus ROA and again, repeating as one of the top most profitable banks in America in the top 10. We did on a group [indiscernible] good opportunity, but because our stock was temporarily depressed and we hold our standards out because we do not dilute our shareholders, our bid was not acceptable to the other opportunity. We will hope to revisit that company soon as our stock has recovered. As to the large nonperformer, there has been significant movement from last quarter's report, but we stand by our comments that we expect no further loss. The loan was nonperformed and no income was recognized in this quarter for the loan or this would have even been a stronger quarter. While work remains, we're encouraged by the progress that has been done this quarter. I have to say here that Kevin Hester, David Carter and Mike Cook I want to thank a special thank for them. They spend a lot of time on this nonperformer. They took the bull by the horns and protected the shareholders of Home BancShares, and thank you guys for a great job. That's a solid testament to the quality and commitment standards of our people. Mike Cook now taking over the leadership a while back to the leadership of the Dallas region, region now reflects the credit culture of homes operating and underwriting standards. It's certainly nice to have those loan problems for the most part, behind us now, but there is some work to be done. However, we think we see the light at the end of the time. In our environment where industry loan growth remains challenging, except a loan growth should always be examined Key. Growth generally comes from a combination of pricing structure terms or product standards. And when there is robust standout extraordinary loan growth in an environment that does not support that kind of loan growth once you look closely at the right structure and terms. It's extremely important that your team from the top down to the junior lender loss that lending experience. And not only lending experience, but quality lending experience was skin in the game. At home, that starts with me at the top as an asset quality hope, who's spending my sixth decade in the lending process. We believe in quality lending. I have been involved in over 50 M&A deals happy with certainly the most difficult. But even with all the problems associated with the acquisition, we have worked our way through those problems with a good partnership of happy and home employees together. We opened a new break in Rockwell, Texas, led by Kane Pierce. We're excited about that. Glad to be in Rockwell, and this is a new branch, not a replacement. New events included hiring our first in-house counsel, Mr. Jeff Campbell, who will fill the role of Corporate Counsel, we want to welcome Jeff to the family and look forward to working with him. Donna, I just want to make a quick recap to the quarter. If you will allow me to do that. And I want to leave this with the investment community. Record adjusted income record revenue, loan growth from a negative $600 million and a $626 million swing, stepped-up repurchases from $500,000 to $1.5 million PPNR, a record $171 million and adjusted efficiency ratio of 40.46% stable margin of 51 and Mountain Commerce already been a contributor sooner than expected. That has gone well. Continued confidence in homes credit culture. So when you look at the adjusted earnings, the profitability metrics, the efficiency ratio, the stable margin, elevated share repurchase and strong balance sheet growth I believe Home's second quarter once again produced one of the strongest banking performances in America. You know you're on, I rest my case. Back to you, Ms. Donna.

Okay. Well, thank you, Johnny. It was another amazing quarter. And our next report will come from Stephen Tipton.

Thanks, Donna. As Johnny mentioned, the second quarter of 2026 was a strong showing with the inclusion of Mountain Commerce Bank in Tennessee and a little organic loan growth from legacy Centennial Bank. Adjusted earnings particularly excluding merger expenses, were $128.1 million, producing a 2.09% return on assets, the same as last quarter, and a 16.82% return on tangible common equity, which is on a TCE ratio of 13.22%. The reported net interest margin was 4.51% in line with Q1, all while adding $1.5 billion in loans and deposits from Tennessee. The core margin, excluding event income, was 4.47% and in line with where we guided to on the call in April. The overall loan yield, excluding event income, averaged 6.96% and exited the quarter at 6.99%, while interest-bearing deposit costs averaged 2.38% and exited the quarter the same at $2.38 in Total deposit costs were 1.85% in Q2 and exited the quarter at 1.84%. Strong noninterest income was a highlight for the quarter at over $53 million. Higher loan recovery income, fee income at CCFG and increases from our SBIC investments were the primary drivers and got us back to levels we saw in quarters 2, 3 and 4 of 2020. Switching to the balance sheet. Legacy deposit balances declined in Q2 by $179 million as a result of tax payments and seasonal outflow in April. Worth noting, deposit balances increased by $86 million in May and over $200 million in June to end the quarter at $19.1 billion. Loan production rebounded in the second quarter to just over $1.4 billion, with nearly $1 billion of that production coming from the community bank footprint. Switching to capital. We repurchased 1.5 million shares of stock during the quarter for a total of $40.4 million. As of June 30, we have over 15 million shares remaining available for repurchase under our current authorization and nearly $450 million in cash at the parent company. Tangible book value per share grew $0.45 to $15.32 or an annualized increase of 12.1%. Capital levels remain extremely strong with common equity Tier 1 capital ending at 16.4% and total risk-based capital at 19%. The and reserve to total loans of 1.92%. We're proud of the second quarter results here at home, particularly with the inclusion of our partners at Mountain Commerce and look forward to the second half of 2026. With that said, I'll turn it back over to you, Donna.

Thank you, Stephen. And to close out our prepared remarks, Kevin Hester has the lending report.

Thanks, Donna. As Johnny noted, we found a way to post marginal organic growth in loan in the second quarter, which looked very difficult when we talked 90 days ago. This included flipping what was an anticipated large payoff early in the quarter into a hold with even a slight increase, which put us on a good path for the rest of the quarter. In last quarter's remarks, I mentioned that Q3 payoffs appeared high as well, and that is still the case. In fact, the gap is higher now than it was 90 days ago. Johnny joked about us not being very good at forecasting, and we discussed on the last call some of the reasons why early projections can be skewed toward declines. That said, we have work to do in order to post loan growth in this quarter. Regarding Johnny's comments about loan growth in general, we are seeing loan rates from the competitors creep lower and lower while probabilities for the next Fed interest rate move are up rather than down. We will continue to maximize loan opportunities while trying to protect our strong NIM so that we can continue to post best-in-class profitability. Asset quality remains solid with an 8 basis point drop in nonperforming loans and a 4 basis point drop in nonperforming assets. Early stage past dues remained under 50 basis points and loan loss reserve coverage of nonperforming loans improved to 177%. As others have said, we began the quarter with the Mountain Commerce Bank acquisition. And from a lending perspective, the combination has gone very smoothly. The similarity of their markets and their lending philosophy to ours will result in a shorter learning curve and earlier meaningful contribution. On that note, Donna, I'll send it back to you.

Thank you, Kevin. Johnny, unless you have additional comments, I think we're ready for Q&A.

Well, I do want to talk about loans a little bit on Wednesday's loan committee, we approved about $350 million worth of loans. So that's our -- primarily the hits coming from our South Florida group that really have a lot of things going on JC and David and their teams are doing an outstanding job in Florida. So there's $350 million worth of just you think I knew those were coming. I didn't know that we're coming this quarter. So one of them we've been working on for several years, and it's going to be the best at most fabulous projects ever built or Miami, Florida. So we're excited about being in that loop with that team of people at its fantastic facility that's being constructed, and it is one of our customers. So we just have more -- they have lots probably, the second -- as I said, the second half they're going to bring even more. So that's pretty exciting for that aspect. So this is construction. So they put their money in first, but it is loan growth that's coming down the pipe for us before long. So anyway, you never know on 1 day or the other, as I said our FBO guy bought another FBO, we didn't know what was on that transaction. Kevin just visited with another one. And so anyway, we're working on it. It's hard to -- as I said, it's like catching a greased pig in a ditch. You think you got him and he gets away from you. So maybe we'll catch it this quarter. So that's all I got to say, Donna, I'm ready for Q&A if the rest of us.

Okay. Operator, we'll turn it back over to you.

[Operator Instructions]. Your first question comes from the line of Jon Arfstrom with RBC Capital Markets. Your line is now open. Please go ahead.

You guys just gave us a bunch of information on loan growth or not loan growth. So I'm a little bit confused on it. But what does your gut tell you today on it? Kevin, you talked about maybe more paydowns expected in Q3 than you expected in Q2. So maybe the indication is down, but then, John, you're talking about a bigger pipeline. So I know you said it's hard to predict, but what does your gut tell you for loan balances in the near term?

Well, we have probably more going on in the Florida market right now than we've ever had going on in that market. It is quite explosive. We have been working on some of the projects. We had basically billions of dollars worth of opportunities that are going to come our way. It may be the next 60 days, it may be months, but they're coming. Those projects are coming from our long-term customers in that market. So it's just hard to tell when they pull the trigger. But overall, I'm pretty optimistic. We were down going to be down $600 million. We ended up moving up $26 million. And that happened just all of a sudden, it just -- it came in and it -- it's kind of surprising. So we're all very good at projecting future loan growth. It seems like when I say we're going to have it, we don't when we say we're not going to have it, we do. So I'm pretty much -- I think it's going to be -- to keep it where it is, I think we're going to work hard, but I don't think it's a problem of that. We at our lenders conference in Florida recently and I told the group so we're down projected to be down x number of dollars I need you all to step up. So I don't know if they just reached in their pocket and brought some stuff that they were going to bring next quarter end. But it all came in pretty fast, pretty quick, including the $100 million piece of credit, another $40 million piece of credit, some really good customer credit. We didn't sacrifice we don't sacrifice quality and margin. for loan growth. So we're not going to do that. And we didn't in this cycle. Kevin, you got a comment?

No, it's all fair. I mean we pay offs are where they are. And we outran them this quarter, and we'll continue to try to do that. Will that happen every quarter? We don't know until it happens. [indiscernible] we did our job.

Yes. I'll probably hold it flat in the model. That's my guess. Chris Poulton, I think last quarter, you also talked about maybe some paydowns in Q2 and Q3 those ounces are a little bit lower, but any help on what you're seeing in the pipeline there and kind of expectations for activity in your business?

Sure, John, it's Chris. Well, we did get the pay downs this quarter that we had anticipated and yet we were still kind of flat, which means we had good production originated $800 million, $900 million so far this year. I think that still looks pretty good for us as we continue. It's a pretty good number run rate for us. So I think like Johnny said, things we work on some things that go away. Sometimes we let them go away. And sometimes they come back, we're seeing a number of things come back our way. As we say, if you love somebody set them free. We let them go and test out the market and come back and sometimes we can work a transaction out, I'll be making a West Coast swing, I think, next week. And have a whole bunch of things lined up that were things we probably worked on several months ago that now they want to sit down and talk. So I feel good about there being opportunities out there. like said, will they come in, in the next couple of weeks or the next couple of months. I think we'll see. I don't see anything different now than I did before about our opportunity to be able to get transactions that are on our terms, if we're patient. I just think it's always about the inpatient here. It's hard to predict loan growth when your goal is in loan growth.

Your next question comes from the line of Brett Rabatin with StoneX Group. Please go ahead.

Guys, good afternoon. Wanted to start -- I wanted to start on the margin. And just it sounds like you're being able to everyone's concerned about competition and funding costs moving higher. But it sounds like you're being able to grow core deposits. So I wanted to see if all those were sticky. And then just if you can hold the loan yields and not see too much particulation on the deposit side, would feel like the margin, at least on a core basis, could hold up pretty well, but I wanted to get some additional color on how you guys see things playing out? And then obviously, you've typically been a little bit asset sensitive. If we get a rate hike, what does that mean for you?

Brett, this is Stephen. I just take the last, first, yes, we -- I guess our [ Alpha Model ] shows almost a 6% increase in a 100 basis point environment. So as I said, did move quarters, I think it's a net positive for us on the deposit side. Our folks have done a great job in negotiating rates on money markets and CDs, we're seeing competition in the 4-plus percent range. And I think most recently, half of our CD maturities automatically renewed at our lower rates and the other half, they negotiated in about the 3.5% range. So they've done a good job there, working relationships what we have. And then through loan committees and our presidents have folks out pushing opportunities for deposit growth to the loan side. I mean at 451 report 447 without an income. I think we can keep it in that range, we would be pleased.

Okay. That's helpful. And then just around the -- you had really strong growth in fees, particularly service fees, trust and mortgage or any of those, do you think impacted by any seasonal factors? Or can those levels be sustained? And any thoughts on just if the outlook there is for growth? Or if maybe those numbers were a little bit high for 2Q.

Brett, this is Steve again. Yes, as I mentioned in my comments, there are a handful of items that were up in Q2 from Q1. I think on the call last quarter, we talked about noninterest income was about as low as it could be at $44 million adjusted for the marketable securities when we're about 52.5, 53 adjusted for that this quarter. Some of that's wealth management, like you said, trust, financial services are alignment with [indiscernible], they're kind of hitting their stride and both of those areas are doing well. So some of that should continue. The loan recoveries, some of Chris' fee income and CCFG that comes when payoffs are a little higher. Some of that is going to bounce around. I think our view is, if you look at -- if you look at the last 5 quarters, it averages about $50 million over the past 5 quarters, and that's kind of where we would expect things to be long term.

Yes. Well, last quarter was kind of -- first quarter was kind of an anomaly. We normally have much more income there. We just didn't -- we didn't get it. We didn't get the kick that we normally get. That happens maybe 1 quarter out of 4 annually. So -- and sometimes not, but that was just -- revenue was down as a result of that. We didn't get -- we got no cake. Just nothing. So but 50 million is a good number, somewhere in that number, that give or take $50 million.

Your next question comes from the line of Michael Rose with Raymond James. Please go ahead.

Johnny, just as it relates to Mountain Commerce, you said that, I think, in the press release, too, that it's contributing earlier and stronger than what you expected. Can you just give us some greater color there on what you mean maybe just in terms of expense savings, revenue synergies or just any other color broadly you have on what would qualify that statement from your view.

As we're going through the quarter, first one, second month and third month together, I could feel the income by looking at the income statement. That we're going to extra income from somewhere and it had to be coming from there basically. So some of it was improvement at home, but a lot of it was coming from them. I really didn't expect that I guess I was shocked by the fact that I didn't expect that kick that quick. We convert in November, and that's about a $6 million savings to the company that we'll pick up at that point in time. So I just want -- I think I wasn't prepared for it that quick and I saw the numbers and the revenue numbers and all of that coming together and just was extremely pleased with what I was seeing on the data reports, I mean, if you remember, we run a -- we get a daily P&L statement here, and you begin to see it and you think where did that come from? How did that happen? And it was just all positive. That's basically it, Michael. Just so I felt it over the quarter day by day as we operate.

No, certainly, I appreciate that color. It's obviously a good deal for you guys. Maybe just going back to loan growth. I know we've already kind of talked about it a fair amount. But you do have pretty good momentum here, as you mentioned, $350 million recently approved loans. I guess, do you think with Mountain Commerce in the fold and maybe some bridging into some higher growth economies now that Dallas is back in a bigger way. And what's going on in Texas. I mean, could we think about structurally better loan growth from home than we've seen in recent years? Or is this the competitive environment, particularly given that some of those markets are more competition just going to be harder?

I can agree with that we could have better loan growth. I don't want to get talk about what other people are doing because it sounds like I'm throwing stones, but we're seeing some ridiculous stuff being done by some people in the marketplace. And it's just really frustrating. We're not going to do that. we got all the capital. We've got tons of capital. We've got -- it's a powerful earnings machine, and we're going to continue to do what's right, and we're not going to get off into chasing rainbows. So we've never done that. We're not going to start doing it now. But I mean, we're seeing structure and terms that I mean, they're just ridiculous. We're seeing that. So we're not going to do that. We're going to continue to as I said, keep the quality, the margin and stability, we're going to price that over loan growth. Could we get loan -- it might get loan growth. Heat's not in 2 long wells. You can get all you want, give it away change the terms of the structure and you load the wagon, you can just absolutely load the wagon delighted. And that doesn't mean that it's going to long term be good. You can look at the asset quality of home over the past since we've been public, basically and look at the quality of what we produce and we'll continue to do that. We're not going to change. We're not going to run off into the sun. I got people pushing me to lower our standards and go do that and they can do that after I'm billing after I retire, I go to half like do that. You're not going to do it in [indiscernible]. The quarter was so good. I had a little slurpy this quarter with Michael.

For next quarter. How about that? Just one follow-up on that. Just in the absence of loan growth, just assuming that the competition does remain intense here in the nearer term, how should we think about the pace of buybacks is kind of what you did this quarter? What we should kind of contemplate? Or is there room to maybe even move that higher, just given what's out there and how profitable you guys are?

We do what we say we're going to do, and we said we're going to buy back the number of shares that we issued in Montanore. So you probably will look for opportunities. They gave us a great opportunity last quarter. That's when we stepped up abatable it took us down and gave us on. I think our average '25 or something, Stephen, '26. So that was a great opportunity for us. So if, in fact, we get an opportunity, we'll be extremely aggressive. But it is our intention to buy that back because it is our intention to do another M&A deal on the heels of Mountain Commerce.

Your next call comes from the line of Stephen Scouten with Piper Sandler. Please go ahead.

Appreciate it, guys. I'm curious, just following up on those M&A comments, John, and kind of what you guys are -- what you're seeing in the market right now kind of with bank stocks up kind of across the board, if that's making it the conversations more palatable or if sellers' expectations just continue to go higher because the group trades up. So just kind of wondering how those dynamics are playing out and the conversations you're having?

Well, raising tide raises all ships or whatever they say, rising time raises all ships. We're seeing that in the marketplace right now. it's pretty good space. BankSpace is a pretty good place to be. If we -- the last deal when our stock was down and we bid on and I understand they wanted a better trade have they taken that, they'd be up 25% today. So it's almost basically the same. It's how many of their shares for our shares and what that trade means and we're not seeing a lot of M&A out there right now. People are being -- they're looking at their balance sheet and they're thinking about is this a diluted transaction. So we're not seeing a lot of that. and we're not certainly not going to do that. I'm having people say, well, Johnny, would you courting right now, you could go buy this and that, if you just take a little dilution. Well, we don't dilute. That's what the world would like for us to do. And then they can say, wow, diluted that last deal. So anyway, we don't do that. We'll continue to do what we're doing. I think there's opportunities out there in the marketplace. But the deals either work they don't work, as I've said in the past. They're either accretive, accretive, accretive or they our stocks back up close to 2x tangible book now. So that gives us the ability to move up and make somebody happy if they want a better price. It could be -- you trade with somebody last month, and it they get to stock and it's up, I don't know, 30% since in. So it just depends -- timing means so much, as you know, timing is the key to where their stock is, where our stock is and if it works or it does more with us hold time. We hold title. It's worked for this company for the last 25 years, the whole tied on underwriting and hold title on acquisitions and do the right thing. So I think we could see a stock market turnaround here for too long. We got -- things are not as strong as they have been, but I don't think it will be bank stocks. I don't think it will be home. I kind of went around the horn there, but I don't know if I answered anything that you asked about.

No, that's -- yes, that's helpful context for sure. I appreciate that. And kind of maybe thinking about expenses for a minute. I feel like last year into the beginning of this year, you were kind of pinging around $113 million, $114 million a quarter kind of range that you were hoping to hold everyone to. What's kind of the number in your mind today, John, where you like expenses to stabilize and what you guys think you can achieve there?

Well, I think you -- had somewhere in that [indiscernible] is fair. We got -- what do we have? $12 million, what would come out of?

If you take the [indiscernible], which I think is kind of last quarter where we said with Mountain Commerce their current expense run rate where we would land and then once we get converted in November, we'll or we will get a good portion of those cost savings out at that time. So we'll see a little benefit from that in Q4 and then obviously, all of the next year.

We think about how efficient home operated and then you add Mountain Commerce, how [indiscernible] operated his group. And then we're going to get some additional savings we'll get some income and we should get some additional sites coming up here pretty quick. So I'm optimistic we can hang in that range in the 120. That's fair.

Got it. That's great. And then maybe just one last clarifying question back on the previous conversation around loan growth and payoffs and whatnot. I think on last quarter's call, you guys have talked about thinking there could be maybe $1 billion in payoffs. Kind of curious where you actually ended up seeing that number come in if it was -- it sounds like maybe it was slightly better than what you're projecting there. And then as you think about third quarter and beyond, if it's north of that $1 billion a quarter number or just kind of framing that payoff dynamic conversation up a little bit?

This is Kevin. Last quarter's number was $1 billion, a little bit over $1 billion. this quarter could be there. It's a little early, but it's -- it can be scheduled for that.

So that magnitude is kind of the same. And then if you're doing $1.4 billion of production, it just kind of depends on how it all funds up and the timing of everything of when and if you can see loan growth. Is that the right way to think about it again?

It gets exactly the way. This is the toughest time in the bank space as rates are going down or going up. They were better for us, they go up. But when they start down, when the rates start down, then people try to jump ahead of a loan rate and go in and cut the rate 1.5 or so and kind of deal with somebody and tie it up. And that's -- this is the toughest going up is a lot easier than going down. So this is a battle that takes one customer at a time and you fight the battle. And this is -- in our history, 3 or 4 tone, we've bought that battle and we'll continue to fight the battle this time. But you got -- it's not necessarily all right. I mean the structure of some of these deals. And the loan to cost and loan-to-value ratios have kind of gone out of whack. It [indiscernible] late 2025, [indiscernible] and people are doing stupid stuff. So we're seeing some of that in the marketplace. And that will come home to haunt people. I believe we're just not going to play the game. We don't have to we got a good machine that's generating really good solid income. And the difference between a record month and not a record month is what -- how much risk we want to take. And we're not big worse takers.