Good afternoon, ladies and gentlemen, and welcome to the Farmer Mac Second Quarter 2025 Earnings Results Conference Call. This call is being recorded on August 7, 2025. I would now like to turn the conference over to Jalpa Nazareth. Please go ahead.

Good afternoon, and thank you for joining us for our second quarter 2025 earnings conference call. I'm Jalpa Nazareth, Senior Director of Investor Relations and Finance Strategy here at Farmer Mac. As we begin, please note that the information provided during this call may contain forward-looking statements about the company's business, strategies, and prospects, which are based on management's current expectations and assumptions. These statements are not a guarantee of future performance and are subject to the risks and uncertainties that could cause our actual results to differ materially from those projected. Please refer to Farmer Mac's 2024 annual report and subsequent SEC filings for a full discussion of the company's risk factors. On today's call, we will also be discussing certain non-GAAP financial measures. Disclosures and reconciliations of these non-GAAP measures can be found in the most recent Form 10-Q and earnings release posted on Farmer Mac's website, farmermac.com, under the Financial Information portion of the Investors section. Today, I'm joined by President and Chief Executive Officer, Brad Nordholm, who will lead our discussion on second quarter 2025 results; and our Chief Business Officer, Zack Carpenter, who will discuss customer and market developments. Select members of our management team will also be joining us for the question-and-answer period. At this time, I'll turn the call over to President and CEO, Brad Nordholm. Brad?

Thanks, Jalpa. Good afternoon, everyone, and thank you for joining us. I'm very pleased to announce that we have achieved record results across the board during the second quarter of 2025. More specifically, we grew core earnings 19% year-over-year. We grew net effective spread over 12% compared to the same period last year, and we surpassed $30 billion in total outstanding business volume for the first time. Our total portfolio is well diversified by both commodity and geography, and we remain confident in the overall health of our portfolio as evidenced by our continued strong asset quality metrics. We ended the quarter with a record $47.4 million in core earnings and a record net effective spread of $93.9 million. The growth in spreads was driven by higher average loan balances and the continued shift to higher spread business, which has been a key driver of the increase in net effective spread over the past several years. Our strategic decision to diversify our loan portfolio into newer lines of business, such as renewable energy, broadband infrastructure, and corporate agribusiness, has been a key priority, and that diversification is benefiting us through changing market cycles, and it is benefiting Rural America. Also reflected in our core earnings results this quarter is the purchase of $35.6 million of renewable energy investment tax credits that resulted in a benefit of about $3.2 million. We continue to actively evaluate these types of renewable energy credits during 2025 as we continue to be a significant participant in the project finance market, which gives us unique insights into the value of these credits. Partially offsetting the growth in net effective spread in the second quarter was an increase in operating expenses related to headcount, technology investments, and higher transaction-related legal fees. The higher legal fees during the quarter were related to the new renewable energy tax credit purchases I mentioned and business transactions in our new segments of business. Our efficiency ratio remains in line with the long-term strategic target of 30% and reflects our disciplined approach to expense management as we monitor and manage expense growth proactively against our incoming revenue streams. We take pride in our focus on effective expense management as we scale our business, and we'll continue to assess appropriate investments in our operational platforms and resources to support our future growth, our ability to innovate, and our ability to drive profitability. In terms of credit expense, several factors contributed to the $7.8 million net provision to the total allowance for losses this quarter. First, we recorded a $2.8 million charge-off related to two specific borrower relationships, one, a permanent planting loan, and the other, a crop loan for a portion of each loan deemed uncollectible as of June 30. However, after quarter end, we recovered approximately $1.7 million related to the permanent planting loan, which we expect to be reflected as a recovery in our third quarter results. Other factors contributing to the provision in the second quarter were downgrades of two loans in the infrastructure finance line of business and higher allowances related to new volume growth in broadband, infrastructure, and renewable energy segments. Finally, a declining economic forecast that flows as does the volume growth in broadband and infrastructure through our CECL models. These new segments carry different risks and different risk rates, resulting in larger CECL-derived allowances, but they are also generally businesses with higher effective spreads. We believe that our total portfolio is well diversified both by industries and segments, and that we're well-positioned given our strong levels of capital. The fundamentals of our underwriting guidelines and credit policies enable us to continue to effectively navigate the current volatility and uncertainty in the agricultural cycle. While some credit losses are inherent in lending, we believe that any losses in our current credit cycle will be moderated by the strength and diversity of our overall portfolio. And in fact, our overall credit profile remains strong as both 90-day delinquencies and substandard assets decreased quarter-over-quarter. Despite heightened volatility and market uncertainty, our prudent underwriting approach, emphasizing loan-to-value and cash flow metrics, positions us well to withstand market cycles. To date, we have not seen any significant effects on our portfolio related to government actions or changes in policy. We will continue to closely monitor industry and credit conditions as new government policies are implemented. I'm also pleased to share that after quarter end, our Board of Directors modified the terms of Farmer Mac's share repurchase program to increase the total authorized amount of repurchases from $9.8 million to $50 million of Farmer Mac's outstanding C Class common stock. The Board also extended the term of that program to August 2027. Farmer Mac intends to repurchase shares when it views repurchases as accretive and consistent with its strategic objectives. We successfully closed on our sixth Farm securitization transaction in June in some challenging and volatile market conditions, which is a testament to the strength and demand of the Farm program. We're working towards a second transaction later this year and also continue to explore alternative securitization structures that will allow us to expand our offerings while serving as another source of capital management. The securitization program remains an important strategic initiative for Farmer Mac as it allows us to enhance and optimize the balance sheet by efficient deployment of capital and also enables our growth strategy by targeting new asset opportunities. We're very pleased with the tremendous support we've seen from our stakeholders for this program and expect to be in the market before the end of the year with another securitization transaction. Farmer Mac's core capital increased by $35 million to $1.6 billion as of June 30, 2025, exceeding our statutory requirement by $602 million or 63%. The sequential increase reflects higher retained earnings, partially offset by capital impact due to growth in total assets. Our Tier 1 capital ratio modestly declined to 13.6% this quarter from 13.9% last quarter, primarily due to growth in assets in our newer segments. As mentioned on prior calls, this dynamic is expected as we continue to grow our book of business in more accretive segments that require an incrementally higher amount of capital. Looking ahead, we'll continue to evaluate all the capital management tools we have available to achieve our goal of optimizing our overall capital position and maintaining an opportunistic approach to add to our capital buffer. Our strong capital position has enabled us to grow and diversify revenue streams, remain resilient in volatile credit environments, and continue to offer competitively priced liquidity to our customers and their borrowers even in challenging times. I also want to comment on the passage of the One Big Beautiful bill, also known as HR1, which contains many provisions that have the potential to impact Farmer Mac and its stakeholders, including farmers, ranchers, and the renewable energy industry. This legislation includes updates to the federal crop insurance and revenue protection programs, as well as tax benefits on interest income earned on qualified rural or agricultural real estate loans. These are potentially positive for Farmer Mac. We're actively monitoring and assessing the impacts of this new law on us and the industries we serve. We believe our inclusion in the legislation reflects the importance of our mission to increase the accessibility of financing to provide vital liquidity for American agriculture and rural infrastructure. And now I'd like to turn the call over to Zack Carpenter, our Chief Business Officer, to discuss our customer and market developments in more detail. Zack?

Thanks, Brad. We had another solid quarter of outstanding business volume growth. We achieved $800 million of net new business volume with new volume increases across all segments in our portfolio, resulting in total outstanding business volume of $30.6 billion as of quarter end. The growth in our portfolio this quarter once again demonstrates our successful efforts over the last few years to strategically grow and diversify our business segments and revenue streams throughout changing market cycles. The shift to higher spread business has been a key driver of our record results, and we believe our pipeline and business composition will continue to position us well for the remainder of the year. The infrastructure finance line of business grew by $644 million in the second quarter to $10.4 billion as of quarter end, reflecting the continued strong demand for electric power, the continued investment in renewable energy generation and storage, and the significant demand for liquidity for data center investments. Our Renewable Energy segment grew $332 million in the second quarter of 2025, a 122% increase year-over-year, ending the quarter at nearly $2 billion. Our near-term pipeline does remain strong. Despite the increase in policy uncertainty around the overall renewable power investment market following the passage of HR1, we expect to continue to participate in renewable energy power transactions for both new projects and refinancing opportunities of existing projects. In addition to the substantial increase in need for new power generation, the tax credit phaseouts for renewable energy generation projects in HR1 will likely result in a flurry of activity over the next 12 months for projects to start construction to meet required milestones to maintain tax incentives. Our Broadband Infrastructure segment grew $200 million this quarter to $1.2 billion as of quarter end. We anticipate increased financing opportunities for rural telecommunications providers driven by fiber line expansion, wireless broadband deployment, data center build-outs, industry consolidation, and mergers and acquisitions. These developments are crucial for rural economic growth and the connectivity needs for rural America. Our Power and Utilities segment grew $112 million this quarter, largely due to strong loan purchase activity supporting investment needs of rural electric generation, transmission, and distribution cooperatives. Growing business volume in our infrastructure finance line of business remains a top priority, and we will continue to focus on strategic investments in these areas to build out our expertise and capacity as market opportunities arise. Turning to the agricultural finance line of business, volume increased by $188 million in the second quarter to $20.2 billion as of quarter end. Growth in the second quarter consisted largely of strong loan purchase volume in both the Farm & Ranch and Corporate Ag Finance segments. Our Farm & Ranch segment business volume increased by a net $123 million in the second quarter to $18.2 billion as of quarter end, as our Farm & Ranch loan purchases portfolio grew by $429 million, outpacing scheduled maturities. We believe that we will see loan purchase growth continue into the foreseeable future due to the continuing agricultural economic tightening, the potential for increased tariffs and trade policy changes, and continued inflationary dynamics for agricultural inputs. As Brad mentioned, we are actively assessing the provisions in HR1 that have a direct impact on Farmer Mac related to enhanced tax benefits for qualifying agricultural real estate loans. We do believe our inclusion in the new law will provide Farmer Mac with an opportunity to further our mission of finding innovative ways to increase access to capital and reduce the cost of credit for farmers and ranchers. The Farm & Ranch segment is core to our mission, and we remain committed to bringing our customers products that provide capital and risk management solutions as well as supporting their borrowers' financial needs. Our Corporate Ag Finance segment grew $64 million in the second quarter to $2 billion at quarter end. Although quarterly volume can be unpredictable, opportunities in this segment are more accretive to net effective spread compared to the Farm & Ranch segment. We are continuing our efforts to further our relationships and modernize our internal infrastructure and anticipate increased credit demand to support larger, more complex agribusinesses in the coming quarters. We continue to be excited about the strategic direction of the company and remain focused on our mission to provide capital through the agricultural and economic cycles. We believe we are well-positioned to make continuous progress on our long-term strategic growth initiatives as we navigate this backdrop of broader market uncertainties stemming from factors such as interest rates, regulatory shifts, and policy changes that could have a potential impact on the industries we serve. And with that, Brad, I'll turn it back to you.

Good. Well, thank you very much, Zack. Our team delivered record financial results in the second quarter while fulfilling several important strategic and revenue objectives. We delivered core earnings that were a record. We maintained a strong credit profile. We reported a core return on equity of 17% while holding our efficiency ratio below our strategic target of 30%. We're optimistic about the future, and we believe that we continue to be well-positioned to deliver on our multiyear strategy with strong liquidity and capital levels, a diversified business mix, highly effective risk management practices, and most importantly, a talented team of dedicated professionals here at Farmer Mac. And before the operator, I turn to the Q&A period, I'd like to take a moment to thank Aparna Ramesh for her contributions to Farmer Mac over the last six years. Her leadership contributed to a very strong, creative, disciplined, and resilient finance team that continues to execute on our strategic initiatives without missing a beat. While we are sad to see Aparna leave us, we are proud that Farmer Mac is a springboard to exceptional opportunities for talented leaders. As we noted previously, we have launched a nationwide search for a new CFO, and we'll provide updates as appropriate. And now, operator, I'd like to see if we have any questions from anyone who's on the line with us today.

And your first question will be from Bose George at KBW.

Actually, I wanted to ask first about the spread outlook. I mean, I think the last couple of quarters, you've talked about spreads potentially moving down a little bit. Obviously, they've held up well and actually have gone up further. So, how should we think about the outlook there? Also, this quarter, like looking at the Farm & Ranch, especially the spreads in there within the segment itself, went up. I think it was six basis points. So, can you just talk about the drivers of that as well?

Sure. Zack, go ahead, please.

Yes, happy to. I'll stick with Farm & Ranch first to your second question. I think this is a strong mix question that we saw in the second quarter. We had a very strong growth rate of loan purchase in our core Farm & Ranch loan purchase product that outpaced significant maturities in AgVantage. So the delta of that mix having strong accretive NES in the loan purchase side resulted in higher accretion in the overall segment and effective spread percentage as the AgVantage balance decreased. We typically see much tighter credit spreads in AgVantage. And so the delta there is really the driver of that growth. To talk about the spread outlook, I think this contemplates the diversity of our portfolio. As we've seen over the last few years, we've had a lot faster growth in these newer segments. And those newer segments do carry more accretive credit spreads than, I'd say, our historical segments. So, as we've seen the mix shift more towards higher growth in these newer segments, we're going to see that accretion in our overall net effective spread percentage. And again, I'll highlight that as we've seen the AgVantage product growth decline over the last 18 months, that is also supporting that higher net effective spread growth. So as we look to the second half of the year, as we noted, we do see pipeline activity that's fairly strong in our newer lines of business, and we'll seek to ascertain those more accretive spreads as it grows our business platform.

So, spreads staying around these levels, at least for the next couple of quarters, is reasonable?

Bose, I think what we have here is a little bit of a contest going on between the frankly, above expected growth rate of some of these new segments, including broadband, renewable energy project finance, and corporate ag business, which are all doing really, really well this year. So between that, which is putting a little bit of upward a little bit of a lift on spreads, and then the question of the timing and/or paydown of AgVantage bonds. And I think you referenced past years where maybe we thought we were going to have a little bit of downward pressure. That, in part, was because of the expectation of more closings and draws on AgVantage bonds that have just been slow to materialize. We still have some ones that could materialize in the later half of the year, and that's where this contest comes down. Will they materialize enough to drag down what will be otherwise a continuing accretion driven by these higher segments of business, or not? But I think starting with a place where the expectation is about where we are today is a good place to start.

And then the $3.5 million, the tax credit that you mentioned, does that flow through as a lower tax rate? Is that where we see that?

Yes. I'm going to ask Greg Ramsay, who's our Principal Accounting Officer, who's with us today, to give you the details. It's a very technical question, Bose.

Bose, this is Greg Ramsey. Thanks for the question. Yes, the benefit that we receive from those tax credits it does flow right through and reduces our tax expense. And so you would see our effective tax rate this quarter actually below the statutory rate, and that's really the first time that we've seen that, and that's a result of those tax credits that have accumulated since we started buying them in the fourth quarter of last year.

And then, actually, one sort of related question. I think, Brad, you mentioned there were some legal costs related to that. Is that in OpEx? Or does that net out kind of through that number through the tax number?

Yes. Bose, this is Greg again. Yes, you're right, there are some administrative expenses dealing with those transactions, and those expenses do flow through our general and administrative expenses, through our operating expenses. That's right.

And our next question will be from Bill Ryan at Seaport Research Partners.

I'd like to start off with a couple of questions about HR1. You mentioned that there were some potential tax benefits. I was wondering if you could maybe elaborate on that a little bit more, and how it might stimulate some incremental Farm & Ranch loan demand. And then along the same lines of HR1, and I guess this is a little bit more qualitative. There have been a lot of questions about whether, I guess, going back to 2024, it's like 93%, 94% of new energy production that came online was renewable. Is this something that you think Congress might have to revisit? I mean, is fossil fuels ramping up enough to kind of offset the expected decline that might take place in 2027 and beyond? Again, it's a little bit more qualitative question, but I was curious as to your thoughts on that.

Sure. As it relates to HR 1 and tax savings, specifically, there's a provision in there that we mentioned that's referred to as ACRE. And it provides a partial exclusion from taxation for interest income on new, not refinancing, first mortgage loans on production agriculture. This is something that is not baked into an accretive line in our pro forma. From our standpoint, we expect it to be fairly neutral. But at the end of the day, if it can result in savings to American farmers and ranchers, it's a good thing, and that's why it was important to us to be a part of it. So it's not something that will drive significant changes in any pro forma for our Farm & Ranch business, at least from an earnings standpoint. As it relates to new energy production, it's a fascinating question. I think, as you know, Bill, I spent almost 20 years in the electric power industry before coming to Farmer Mac. And so what's going on is not just a keen interest to me, but I can understand some of the issues. And absolutely, you're correct. Over the last couple of years, incremental capacity in the United States has been dominated by investment in new capacity in solar and wind. And we now have a phaseout of credits. And we also, probably something that we're keeping an even closer eye on over the last week or so, is that we have an executive order, which is a very clearly stated objective designed to make it more difficult to complete permitting for renewable energy projects that otherwise might be done before credits expire or even after credits expire. So we're keeping a very close eye on that. But I think when you look at the fundamentals in the United States and your question about whether it will need to be revisited, I think most are well aware that data centers are driving a significant high single-digit CAGR increase in electric power demand in the United States that projection for electric power demand has really broken from GDP and is much higher. And there's a question: where are these electrons going to come from? And it takes 10 to 15 years to permit and build a nuclear power plant, which we haven't done, by the way, for 30, 40 years, and there are no contractors who will guarantee completion and cost of that. So there's a question of risk allocation. It takes, and there's a significant backlog for gas turbines now for new simple cycle or combined cycle natural gas-fired electric power plants. And the permitting time for that is at least 2 to 3 years, plus a construction timetable of a couple of years, maybe 5 years, best case. So what's going to be happening, as you point out, 2027, 2028, 2029, the fact is that solar and wind are the fastest response to new capacity, and also when combined with batteries, are the fastest response to that. And despite the changes in policy, some of the big drivers of this market now, and they include Google and Amazon and Facebook, and Microsoft, they're out very, very actively looking for anyone who can provide electrons, preferably green electrons, but any kind of electrons right now to support their demand. And we believe that it will result in new renewable projects being built even without tax credits post the wind down of the existing ones. But a lot is in flux. And we are taking an approach as we always have, we're debt, not equity, in these projects. And so we're responsive to real projects that are getting built, and our risks are well mitigated. But we're taking a wait-and-see approach for exactly how the future growth and future demand will adjust.

I have a follow-up question for an update. I'm curious about any additional impacts from tariffs since they were just starting to take effect during your last conference call. Could you provide any updates on that? Also, how are the market facilitation payments to farmers progressing to help them financially?

Zack, can you provide some color on that?

Yes. Bill, it's definitely something we've been watching constantly. And clearly, I think there's just a lot of uncertainty as it pertains to the tariff and especially the whiplash. I mean, recently, the tariffs for many countries were set in place after some of the delays. And I also think it's really hard to paint a broad brush in terms of where we're going to see the impacts. For example, there's a significant amount of U.S. soybeans that are exported to China. And so we've seen a decline in exports there. But in many cases, there's other markets that have opened up. And so we're assessing what the pricing impact on the soybean is to the farmers and ranchers for these changes in exports. On the other side of the spectrum, you've got corn, and there's very little export, or it's not nearly as much as soybeans, and we're going to see a significant increase in ethanol. The U.K. trade structured agreement has increased demand for ethanol from U.S. producers, and feed is a significant component of corn, and we've seen that significantly grow. So it's really hard to assess currently what the overall impact is going to be as some of these structured agreements are put in place, as well as what other potential retaliation or other agreements are made. The one thing I would say is that the American Relief Act in December 2024 gave or allocated $33 billion of disaster relief to farmers and ranchers, and we're starting to see that trickle out there. The USDA does indicate that 2025 will be a fairly high year of net cash farm income for farmers and ranchers, heavily driven by government payments. Farmers and ranchers don't necessarily want to show positive income from government payments, but it is a support for the farmers and ranchers during this volatile time. And I think also with HR1 and the passage of price loss coverage and agricultural risk coverage programs, and an increase in reference prices is another safety net that we're supportive of to help the farmers manage through this potential volatility time with tariffs.

Next question will be from Brendan McCarthy at Sidoti.

Just wanted to follow up on the renewable energy tax credits. Given that those credits are due to phase out, I'm curious about what the timing of that phase-out looks like. And Zack, I think you alluded to there may be a ramp-up in new projects to kind of get ahead of that deadline. I'm wondering if we can maybe expect a similar quarterly run rate in renewable energy tax credits going forward.

Well, yes, as it relates to tax credits distinct from project finance opportunities and renewable energy projects, we do those opportunistically because they're structured to be very, very low risk and be a very nice kind of discounted arbitrage that results in net income for us. We will continue to monitor the opportunity to purchase those as long as they remain low risk, but it's not a fundamental part of our P&L strategy. It is something around which we are just being opportunistic. As it relates to project finance, though, a lot of the credits are scheduled to phase out next year. Some of the ones, retail credits for EVs, some of the home solar, some of the home improvement, those are phasing out later this year. But for the commercial projects, next year. You then get into a very complicated discussion about the commencement of construction and the requirements that have to be satisfied in order to lock in those credits. And so when you cut all the way through that, it means that large projects may be in construction next year and not be finished for a year or two after that. So again, we're going to continue to be very disciplined as we always have been in underwriting these project finance loans. Again, we're not equity. We're in debt. We're responding to mature opportunities of these projects, where the tax credits and the power purchase agreements and the engineering procurement construction contracts and the operating agreements, and permitting are all locked in and continue to pursue those. And it's a huge addressable market. So even if it contracts by some, there's still a huge opportunity for us going forward. And then we'll see what happens in the back years. As I mentioned earlier, I do believe that we will see some of these projects move ahead even without credits in the future.

I wanted to turn to the $7.8 million credit provision in the quarter. You mentioned there's a $2.8 million charge-off from two loans. Can you go into detail on those two loans?

Yes. I think we generically described them as a permanent planning loan and a crop loan. We're certainly not going to discuss individual borrowers. But Marc, can you give maybe a little bit more of a generic explanation, generally where they are, and some of the circumstances surrounding them?

Yes. Yes. So two loans, the charge in the quarter.

Sorry, this is Marc Crady, our Chief Credit Officer, who is here.

Thank you. Yes, you mentioned the provision, but we took $2.8 million in charges in the quarter on two different loans. One, the first is a permanent crop loan based in the Southwest region. We took a $1.7 million charge on that loan as we deemed it uncollectible at the end of the quarter. But after we closed our books for the quarter, we received a $1.7 million payment on that loan. And so at this point, we think we're well secured on that loan. The second loan is a crop loan also based in the Southwest region that became delinquent in the second quarter due to weak operating performance. A receiver has been appointed to liquidate our collateral. And as we assess the value of our collateral as part of that process, we deemed $1.2 million to be uncollectible and recorded a charge.

And then you also mentioned, I think, two loans in the infrastructure finance segment. Just curious about what lines of business does that come from? I think $2.7 million provision, sorry.

Yes, that's right. Yes. We downgraded two loans in our infrastructure finance portfolio. The first is a solar project that's based in the Southeast, with about $17 million of exposure. The project became operational in mid-last year and has had weak performance since becoming operational, but the company is still current on payments. The second is in our broadband infrastructure portfolio. It's a rural provider of communication services in the Southeast. The company had engaged in a high-growth strategy to build out its network. That resulted in cost overruns and other operational challenges. And as a result, the borrower became overlevered and tight on liquidity. The company right now is out looking for additional capital. And so we should have more information on how that goes over the next couple of months.

And last question for me, just on the share repurchase authorization. How does that fit into your capital allocation priorities? Do you think you'll be more active buying back shares?

Yes. We have a number of tools here at Farmer Mac for being adequately capitalized from an equity standpoint. That includes the rate, the pace of our dividends. I think you have seen us be incredibly consistent in how we think about that, and it has resulted in 14 consecutive years of dividend increases here at Farmer Mac. We have share repurchases as a tool when it is accretive, when the stock price is very low. We have the opportunity to put new preferred capital on our balance sheet, which is something you've seen us do numerous times, and that's an option that we have today. And you've seen us use securitization strategically for diversifying our funding and transferring risk funding risk away from Farmer Mac, but also for more capital efficiency because, from regulatory allocated capital to securitizations, it is less than if we're holding all the risk on our balance sheet. So we have all these tools. We are pursuing securitizations basically as we have the right pools of assets to do those securitizations, and we remain committed to the future. We're constantly evaluating the use of preferreds and potential other securitization, asset pool securitization techniques for managing the aggregate amount or relative amount through a percentage of capital relative to assets. And then we have share repurchases. So there's never a time when one of those is the answer. We are going to be extremely cautious and steady about how we manage dividend declarations here at Farmer Mac. And then the others, we're going to use routinely in the case of Farm & Ranch securitizations and the others opportunistically, depending on what is basically the best, the cheapest, most enduring form of capital, depending on what our objectives are for us at that given time.

Next will be Gary Gordon.

Actually, most of my questions have been answered. Just one technical one on the share repurchase. Should we think of the capital that could be used for share repurchases as part of what historically you talked about as your 35% payout ratio? Or are those separate issues, and that would be in addition to the 35% in any given year?

Yes. As I attempted to just communicate, we are committed to being very, very consistent and disciplined about how we declare our dividends. So you mentioned a target ratio, and we've been somewhere in that vicinity for a number of years now. We really don't want to change that. So this share repurchase should be seen as, again, something that is opportunistic and that is there as a tool and attractive as a tool when our market stock price gets too cheap.

You just answered this one, but why now? Why the share repurchase authorization now versus a year or two ago?

Yes. A couple of things. We hadn't looked at it in a while. We are a larger organization. It is appropriate that we size it at a larger level than the last time we really focused on this. And it's no secret. In the last few weeks, we've had some softness, I think, really unwarranted, but some softness in our stock price. And so it's a combination of factors.

And at this time, it appears we have no other questions registered. I will turn the call back over to Mr. Nordholm.

Good. Well, thank you very much, operator, and thank you all for participating in this call. We're really proud of the results from this last quarter. We feel very confident about the remainder of the year and look forward to giving you another update in the quarter. As always, if you have follow-up questions or just want to generally get a little bit more clarification on some of the things we've discussed today, or other things that you see as you go through our release. Please get in touch with Jalpa, and we will be as responsive as we possibly can. And with that, thank you all again, and I hope you have a really terrific and maybe a bit restful August.

Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.