All right, good morning. We're going to go ahead and get started here. My name is John Davis. I'm the famous and fun tech analyst here at Raymond James. We're excited to have Dave Foss, Jack Henry's CEO, for one last rodeo here before he.
Do we have to say it that way?
Before he retires in June and becomes executive chairman. So Dave, first off, thanks for joining us.
Yeah, good to see you, JD.
This is a generalist conference, so our people obviously have been in the public for a long time, done a lot of these. Maybe for those newer to the story, just a high-level business overview and kind of how you think of the world through a Jack Henry lens.
Sure, okay. So for those of you who don't know our company, Jack Henry, the term that I use to describe us is we're a well-rounded financial technology company. And the reason I emphasize well-rounded is because we provide a broad suite of technology solutions for banks and credit unions in the United States. So by strategy, we choose to focus on the United States. We've had international businesses before. We've ended up divesting them. And we are focused on the U.S. domestic market, serving banks and credit unions. By strategy, we choose not to serve the really tiny banks and credit unions in the U.S. And we also choose not to serve the eight largest banks in the United States. It's all those middle-tier of customers that we serve with outstanding technology. We are known in our space for a couple of things. One, technology innovation.
We are a technology company. And so if you go back and look at press releases and recent discussions about Jack Henry, you'll see that we've been rolling out a lot of new technology in the past several years, innovating new solutions, public cloud-native solutions that we're delivering to our clients and, of course, prospects here in the United States. So a whole bunch of new technology. And I'm sure we'll get into talking about some of these things as JD gets into Q&A here. The other thing that people talk about when they talk about Jack Henry is customer service. So we're known in our space as the best provider of customer service. We survey that a lot. We report on those numbers to our customers. It is kind of culturally who we are. We're very focused on customer service.
But we also have a number of analysts in the space who will do research reports. And they talk about how Jack Henry's service is recognized as the best in the industry. And so we serve around 7,500 banks and credit unions with at least one of our technology solutions. There are only around 9,000 in the United States total. So what that means is most banks and credit unions someway, somehow do something with Jack Henry. But kind of the thing we're known for more than anything is what we refer to as core Technology. So core technology is that primary accounting system within a bank or credit union that processes loans, deposits, and general ledger. At Jack Henry, we have four of those solutions, one on the credit union side of our business and three on the banking side of our business.
We are well known as one of the primary Core providers in the U.S. But then we have all these other solutions, around 300 total technology solutions. Again, today, almost everything we do is in the Private Cloud and/or moving to the Public Cloud as far as the technology that we're delivering.
OK, great. Almost exactly a year ago, we had a little mini banking crisis with the SVB.
Yeah, well, at the time, it was a major banking crisis. Yeah, but.
This was literally, I think, two days after this conference last year. But just want to touch a little bit on the bank IT spending backdrop and kind of what you're seeing real time, what you're hearing from bank CEOs.
Yeah, right now is a really, really good time in our business. We just reported on the last earnings call, sales, our fiscal Q2. So we're at June 30 fiscal year-end. So our fiscal Q2 was the December quarter, the largest sales quarter, December sales quarter in the history of the company, second largest of all quarters in the history of the company. But this was our largest Q2, was the December quarter. And the really good news for me was we ended that record Q2. And during Q3, by the time I got to the earnings call in February, our pipeline was larger than it had ever been in the history of the company. So that's pretty remarkable when you have this huge sales quarter. And then four weeks, five weeks later, the pipeline for sales is larger than it's ever been in the history of the company.
I think that's a pretty good sign as far as what the future looks like here for sales. I think that's a good indicator of the answer to JD's question about tech spend. So we read lots of surveys. I report on them around the earnings calls. As soon as I get them, kind of what are we hearing as far as information in the market? This year, for 2024, most of the surveys are indicating between a 5%-10% increase in tech spend for 2024. Our own survey that we published a few months ago indicated the average expected tech spend increase was right at 10%. And so that range, I think, is a good range to consider for this coming year.
One of the things I point out regularly on that topic is if you're running a bank or credit union today in the United States or anywhere, one of the reasons that tech spend continues to go up is because almost any problem you have that you need to solve at a bank or credit union, today, technology is the answer. If you're looking to gain deposits, you don't stuff envelopes with some mailer and mail things out. You use technology. You attract people using something online to come to your bank or credit union and open new accounts. And so almost any problem, whether it's fraud, whether it's efficiency in the back office, whether it's gaining new customers or serving those customers, almost any answer to any problem that a banker has today, technology is the answer.
Back to the point I made at the beginning here, we're a well-rounded financial technology company, meaning we offer a broad suite of solutions. Usually, we have something that can solve the problem that that banker is trying to solve with our technology lineup. And so I think those things together are what's positioning Jack Henry right now in a really good position as far as sales and then, of course, long-term performance. One thing I will point out, too, we almost never sell a license of anything anymore at Jack Henry. Almost everything we do is delivered in the SaaS environment, where we're signing a contract. It's a long-term agreement. And so revenue kind of starts to flow in.
And so our model is that we're just constantly layering on, layering on new revenue through these new contracts because almost everything we do is a recurring revenue, recurring revenue long-term agreement today.
Dave, just want to talk a little bit about the growth drivers in the business. A handful of years ago, when I picked up the stock, you talked about 6%-7% growth. At the time, the industry was growing 3%-4%. I think industry is still probably growing 3%-4%. You've accelerated to 7%-8%. So a little about what drove that acceleration and also how do you get to that 7%-8% when the industry is growing 3%-4%?
Yeah, so we've alluded to it a little bit here so far already in the discussion. So part of what's fueling that is we are gaining share significantly on the core side of our business. So we're signing 50%-55% new core logos a year at Jack Henry. And as I pointed out in the last earnings call, there are generally only about 100 decisions a year, somebody choosing to leave whoever is their core provider and go to somebody else, only about 100 industry-wide. And Jack Henry is winning 50%-55% of those per year. So we're well ahead of anybody else in the industry as far as the core side of our business. And then beyond core, I mentioned earlier, we've been innovating all these new solutions that we've been rolling out here in the past few years.
So we've been constantly filling the funnel on the back end. As we roll out a new product on the front end, we're working on new solutions on the back end to fill that funnel with new opportunities for sales. Nobody else in our space is doing the level of innovation Jack Henry is doing. In fact, I could point you to a couple of companies who you wouldn't see any new announcements about, new things they've developed internally. There's a lot of M&A that's happened in the past several years that try to depend on M&A. But at Jack Henry, we're very focused on innovating new solutions and rolling them out so that our sales teams constantly have new things in their bag of tricks that they can go and sell. So it's a combination of taking share on the core side.
Normally, when you win a core customer, they don't just buy core. They buy a bunch of other solutions to wrap around the core. On the banking side of our business, that's usually 50%-60% other Jack Henry solutions when they buy a core. On the credit union side, it's around 35% other solutions that they buy when they buy a core. So every one of those core wins brings a whole bunch of other solutions along with it. But then outside of core, either inside our core base or to non-Jack Henry core customers, we have all these new solutions and some solutions that we've had for several years that are still popular, that are driving new sales. And so because and JD knows this. I'm sure many of you don't know.
But we've just announced a couple of new solutions in the past couple, three months here, Banno Business and Financial Crimes Defender, create a whole new market for Jack Henry that now you'll see sales. And I'll be reporting on those in the earnings calls. You'll see sales coming from those products. And we'll have more of those things rolling out in 2024 to continue to fill the pipe for the sales team to drive that top-line revenue growth. Now, of course, this is on a rising revenue number. So keeping in that range, that 7%-8% range, gets tougher and tougher as the comp gets harder. But that's the point of continuing to innovate and fill the pipe with new solutions.
No, that's a great lead-in to my next question, which is just the tech modernization strategy. Obviously, Banno Business is part of that. Maybe just lay out you've been doing it. I think we're kind of three years in at this point.
Two years.
Two years in.
Two years.
You've got a roadmap. Just maybe explain to people what the goal is here with tech modernization.
Sure. So what JD's alluding to there, we, in February of 2022, on the earnings call of February 2022, I announced this strategy that we refer to as technology modernization. And what I announced at the time was I said, this isn't a revenue event. This is a strategy discussion. I want to make sure that investors and prospective customers and existing customers know where Jack Henry is going because ultimately, we are a technology company. And we've got to make sure that people understand what are we doing from a technology point of view and where are we going. And so what I discussed at the time was that our strategy was to start moving pretty much everything we do into the public cloud environment.
What that requires is when we think about the core business that we were just talking about, as far as we're concerned, that required rewriting the core functionality. We've seen some companies that have done lift and shift moves where they take some old technology and they make it work in the Public Cloud environment. But when you do that, you're not really taking advantage of all the real power and the good stuff that the Public Cloud environment has. And so at Jack Henry, our announcement was, we are going to do this what we consider to be the right way. It takes a long time. And it's expensive. But it's the right way to replatform essentially everything we do, rewrite these solutions, and make them Public Cloud-native.
For the core, what I said at the time was, this will be about a 5-year initiative for us before we'll have any banks fully running core on the public cloud. We're now 2 years into that. Before the announcement, we had been working on development for about a year and a half. So when we made the announcement, we had already proven that our concepts worked. And we already had customers in beta. But what I said was, you won't see any revenue impact probably for about 5 years. But this is not a big bang initiative either. We are going to be rolling pieces out along the way. My whole point about 5 years is you won't see a bank fully running on the public cloud probably for 5 years. But we're rolling out these pieces along the way.
Banno Business, for example, is one of those solutions. JD just alluded to that. It sits on this platform that we've created. Our partnership, by the way, is with Google. We already have major workloads running in AWS and Azure. But Google, going forward, is our primary technology partner. So we've created this platform in Google. And we're writing all this new technology on this platform. It's all integrated together on the platform. But then we can take advantage of all the power underneath the Google Cloud for database management and reporting and dashboarding and security and the development infrastructure and all that kind of stuff. So we have several of those non-core pieces already in full production. They're sitting on that platform.
And then some of the core pieces, we are either live or we're in beta because we're rolling out little pieces at a time as opposed to, like I said, as opposed to a big bang. The interesting thing for us, the really interesting thing, has been how widely and well accepted this has been now in the industry, now that people understand what we're doing. When I first made the announcement, there were a lot of people scratching their heads saying, OK, what is this? And are you really rewriting things? And how is this any different from this or this or that?
But now that we've had time to really explain it and we've had a number of particularly larger non-Jack Henry core customers, their CTO, CIO, done deep dives on what we're doing, inevitably, they come back and say, OK, what you guys are doing is totally different from anybody else in the industry. It's a much more well-thought-out strategy. It's much more logical if you're really going to take advantage of public cloud for the long term. And so we're getting great validation, particularly from larger banks in the space, regional banks in the space. But we have a long way to go as far as delivering on that, but lots of validation. And frankly, I believe that story and the reality that people are seeing in what we're doing there is helping us win in our traditional business.
People are trying to get a relationship with Jack Henry, kind of understand how to work with us. So as they want to move to public cloud, they already have a partnership with us. And they can just start to make that migration whenever they're ready. Now, one of the things to keep in mind when it comes to public cloud is the regulators aren't totally ready for everything to be public cloud yet. And we knew that when we made the announcement. And I was very public about that. We've got to kind of work with the regulators and bring the regulators along because nobody out there is doing everything public cloud. And so this is a real shift. And they have to learn how to regulate us and our customers in that environment. But they're coming along. Banno is fully public cloud-native.
The regulators, we did training with the regulators. They really understand how to do that now. We believe they'll come along about the same speed that we're going. But ultimately, this is, we're a 47-year-old fintech, had a great run for 47 years. This sets us up for the next 47 years. This is the technology stack that really positions us to continue to take share and win for many years to come. This isn't just kind of a flash in the pan, let's do this for a couple of years type project. This is a really strategic initiative for our company to set us up for success for the future.
I think on the last couple of earnings calls, you've made some pretty positive comments about the competitive environment. So maybe just expand upon what you're seeing. I'm sure part of it's the tech modernization strategy and being able to win more. But just curious, kind of there's not only, obviously, a handful of players. So just curious any thoughts there.
Yeah, so without naming names, it's a good time to be us in the environment that we're in right now because there are challenges that particularly our major competitors have been faced with. There have been major layoffs and lots of disruption with our major competitors. And at Jack Henry, we've done no layoffs. We're certainly dealing with all the same things anybody else is dealing with as far as the economy and so on. But we haven't done any layoffs. There's been no disruption as far as the team or the focus or the delivery of what we're doing. And so no doubt, we've been the beneficiary of some of that disruption. The thing that I stress all the time to people who aren't in our industry, they say, well, if these other guys are struggling so much, why doesn't everybody just move to Jack Henry?
Well, the thing I stress all the time is if you're the CEO of a bank or credit union, the hardest decision you will ever make when it comes to technology is to trade out your core provider. The reason for that is it is the stickiest thing that they have at the bank or credit union. That requires training of every employee of the bank. It requires training of your customers, so the customers of the bank or credit union. It's just a really big lift for them to trade out their core. So I'll have CEOs tell me regularly that if they decide to change their core when they're coming to Jack Henry, we have to put every other strategic initiative on hold for at least a year and a half.
Every other thing they want to do goes on the back burner for at least a year and a half because it is so disruptive to change core systems. So that's why you don't see all of a sudden everybody out there saying, oh, let's move to Jack Henry. Things seem to be going well over there. It's because even as bad as it is, as far as the service they're getting or the technology that they're continuing to run, they feel like it's being cash-cowed. It's still a really, really difficult decision to go through that move. So yeah, there's disruption in the space. We've been the beneficiary of some of that. But it's still not, people aren't just flooding to the Jack Henry doors to say, we want to do business with you because of that hugely disruptive nature of going through a core conversion.
You guys have guided to deconversion fees to basically be de minimis. Bank M&A has been nonexistent. Maybe talk a little bit. There's obviously a lot of focus on deconversion fees. And obviously, losing customers is a good thing. But you also get convert and merge revenue on the other side. And one of your banks buys another that's on another core provider. So maybe talk a little bit about what you see, what you're thinking, what you're hearing from bank CEOs just on the bank M&A environment more broadly.
Sure, yeah. So this is something that I spend a lot of time on. Talk to a lot of bankers very regularly. And so just to make sure everybody's on the same page here with regard to what JD is referencing, if one of our customers is acquired by another customer because, again, we almost never sell licenses. Most of our customers are running in a SaaS environment. If one of our customers is acquired, they have to essentially buy out their contract. That creates what we refer to as deconversion revenue, deconversion fees. So what you will see us do is we will disclose we'll do an 8-K before the earnings call disclosing what the deconversion revenue was for the quarter because deconversion revenue just happened. It's not a reflection of operations of the company. We don't drive deconversion revenue.
It just happens if one of our customers is acquired by somebody else. The good news for us is, historically, we are normally the beneficiary when M&A happens. So it's normally our customers acquiring other customers. And so that's when we get convert merge revenue. So convert merge revenue is a bank is acquiring another bank. They call us up and say, we're going to acquire this bank. We need you guys to come in and do a conversion of them to the Jack Henry system. And so we do that conversion. It's not adding a new customer. But it's adding a whole bunch of account volume and transactions and all the other good things that come with a bank getting larger. And so convert merge revenue is a reflection of the operation of the company because we are doing real work.
And it is planned and all that kind of stuff. It results when a bank or credit union acquires somebody else. But deconversion revenue happens when somebody is acquired away from Jack Henry by somebody else. So one of the things we talk about all the time is deconversion revenue, almost 100% margin in deconversion revenue because it's somebody buying out their contract. But it's the revenue you don't want to see. It's the revenue you don't want if you're me because essentially, you're losing a customer. And so it's kind of this give and take of investors who, if they see deconversion revenue drop and we've had it happen in some quarters, it drops significantly, people go, oh my gosh, there's a problem with Jack Henry. My response is, no, that's great news. That's great for Jack Henry. If deconversion revenue drops, it's the revenue you don't want.
So we kind of have this ongoing dialogue with investors, particularly people who don't know our industry very well or don't know our company very well. It has been an interesting time here for the last several months. M&A has almost come to a complete stop in the banking space about a year and a half ago, something like that. There was still some M&A happening. But it's been really, really low. The good news for us is we haven't been losing any customers to M&A. The bad news is we also haven't been converting very many to Jack Henry because they were acquired by somebody else. But as I talk to the experts and I talk to bankers, I just spoke at. There's a big conference in Phoenix every January called Acquire or Be Acquired.
It's all a bunch of bankers, primarily CEOs and board members, who come together. There's a little speed dating that happens, right? Hey, I'm thinking about maybe selling my bank. Of course, nobody ever wants to admit they're going to be a seller. Everybody wants to pretend they're a buyer. But you have real sellers that show up, too. So they get to know each other. They hear presentations by people in the industry about what's going on. I can tell you without any hesitation, having just been at Acquire or Be Acquired, there is a lot of interest in M&A in the banking space. I think for bankers now, they feel like they have some currency again. Bank stocks were beat up bad last year. They've rebounded generally pretty well. So I think a lot of bankers feel like they have the currency.
Most of them who are the real acquirers, they have already targeted some banks that they want to go after. There are conversations happening. You're interested in selling your bank. And so I think 2024, you're going to see a pickup in bank M&A. And of course, we will lose some. We'll win some. We generally are the beneficiary when M&A happens. It's usually our customers acquiring other smaller institutions. But I'm sure there will be some where we'll lose a customer. And that's just what happens. It looks like you have a question over here.
All right. Yeah.
Do you prefer a busier bank M&A environment? Which side of that do you favor?
Yeah, so like I say, when M&A is happening, we are normally the beneficiary of that. And so that tends to be good for Jack Henry when M&A is happening. And again, even though consolidation happens when M&A is going on, people will ask me, oh my god, consolidation, we're going to end up being Canada. There's only going to be eight banks or whatever. I do not see that coming. I think there are a lot of some very small institutions out there who have a tough time operating, particularly in this day where you need to constantly be upgrading your technology infrastructure. So I think it's good for the smaller banks. And it's good for our customers if M&A. Oftentimes, it's good if M&A happens.
Where it's detrimental is if you have a community somewhere where now the only bank they had in town that cared about their region, if that bank gets acquired away and nobody's really paying attention to them anymore, that's potentially bad for a community. But if you're asking about my business, I would say it's generally good for us when M&A is happening at a good clip. And by the way, for 30 years, the average has been about 4% per year consolidation, meaning number of institutions going away, about 4% per year for 30 years. I see that trend. Once we get back to kind of some normal rates here, I see that trend continuing again. I think 4% per year is kind of a logical number that's supportable within the U.S. banking system.
All right, Dave. I did want to touch on margins. I think you guys gave a midterm guide of kind of 20-40 basis points of annual margin expansion. I think the guide this year is towards the higher end after a strong first half. But at a high level, just talk about what drives that margin expansion and kind of what could take you above or below?
Yeah, so several things. I mentioned earlier that we have a big move to Public Cloud. We believe that will be helpful in the long run to margins. Today, we are a large Private Cloud provider, Private Cloud meaning we own our own data centers. Those data centers are very expensive to run, particularly when you think about not only at the cost of the environment and the hardware, but if you think about the security environment that we live in today. We're constantly having to upgrade and monitor and add people when it comes to all the security components, making sure that you keep the bad guys out and keep things flowing. So being in that environment is very expensive. The ability to leverage the Public Cloud environments and essentially pass cost through, that's a helpful thing to us when it comes to the margins.
When you look at the solutions that we've been developing here lately, the rollout of some of these solutions, they tend to be more profitable overall because of the pricing model that you can get with those solutions. That's helpful to margins long term. Then we're continuing to look at those pieces of our business where we can become more efficient. AI comes into play. We have several initiatives going on at Jack Henry today, not only in things we deliver to our customers as a technology provider, but things we do internally when it comes to customer service where we can leverage AI to make our own company more efficient. There are a number of different kind of pieces in that calculus that goes into projecting the margins going forward. I will point out, and some of you certainly know, we hired a new CFO.
Now she's been in the role about a year, a new CFO. And so part of her charter was to kind of reset the expectations with investors. About a year ago, she did that. And we are performing to that level now. And my ask of her was, make sure that what we're conveying to the market is what we can actually achieve. I don't want to talk aspirational. I want to make sure that what we're sharing with you all are the numbers that we really believe we can achieve. And she's done a great job of handling that and kind of resetting expectation.
OK, great. And then I do want to touch on free cash flow conversion. Historically, you guys have been 80%-100%. Then there's some legislation on the non-deductibility of R&D expense that's taken a bite out of free cash flow. But fortunately, it looks like there's some legislation in the works to hopefully reverse that and get back to the 80%-100% free cash flow conversion. But just thoughts there, like CapEx. You guys are a technology company. But just general thoughts on free cash flow.
Yeah, so I alluded to it earlier. There are a number of companies in our space who profess to be technology companies but don't seem to invest at all in new technology while they're not impacted at all by this tax legislation. At Jack Henry, we've been doing a lot of investment in new technology. By the way, the number we quote is 14% of revenue that we're putting in. So between capitalized costs and P&L expense spend, we're spending about 14% of revenue. We've been at that rate now for almost 10 years. I see that continuing. So you can assume that we'll be right at around 14% of revenue that we're putting back into new R&D development. And we're a technology company. That is good for us.
The bad news has been this tax legislation really hit us hard a couple of quarters ago because we had to pay a very large cash tax. So free cash took a hit. And if that doesn't change, as Mimi has discussed, and I'm not an expert at tax, so I'm not going to go too deep here. But as Mimi's discussed on the earnings call, for that to totally unwind, it would be five years without a change to the tax legislation. But as you point out, this has impacted lots of technology companies. And if you think about the largest technology companies in the United States, they've had a significant impact because of this legislation that was passed last year or whenever it was. And so there's a lot of lobbying going on, a lot of work to try and change this.
Mimi alluded to on the February call that there was a lot of chatter that it might actually be reversed now in the current session. That has not happened. So now the thinking is it may not happen until after the election. The good news is there is a broad movement toward kind of undoing that tax legislation, which, of course, would be a nice benefit for us and get us back to more of our normal free cash flow rate.
OK, great. Then you guys do generate a lot of cash. You've got a very clean balance sheet. Just talk a little bit about capital allocation, how you think about it, the M&A environment, what your kind of hurdle rates are. Are you seeing any rationalization of valuations that have been somewhat absurd for the last handful of years?
Somewhat absurd, I'd say very absurd. But yeah.
Yeah, just thoughts more broadly on capital.
Yeah, so the thing many of you probably don't know is so I've talked a lot here today about all the innovative solutions we've been developing and kind of using our own teams to create new solutions. If I'd been sitting here 10 years ago, we would have been talking about how Jack Henry was essentially known as a serial acquirer. We did a lot of acquisitions. I led that practice for years before I became president of the company. And we did 26 acquisitions in about 14 years. And so we've done a lot of M&A in our history. And we were known as a good, solid acquirer. We had a great team. And I felt strongly about our skill when it came to M&A and our ability to evaluate deals and complete those deals successfully for our company and for our investors.
It's been frustrating here the last few years because, yeah, valuations got totally out of whack a few years ago when IPOs were happening and SPACs were happening. And everybody out there thought their company was worth way more than it was worth. And of course, now there's no IPOs hardly happening anymore. And SPACs, nobody even brings up SPAC. But valuations have still remained high. And it's because a lot of PE money was continuing to be pumped into particularly these privately held companies, owner-operator companies. So is it going to change in 2024? I have not seen anything yet that would indicate that it's going to change. But almost every investment banker I talk to says, this is the year. Boy, it's going to get good. The sun's going to shine. The roses are going to bloom. Everything's going to be great. I'm not seeing it yet.
But at some point, just logic tells you, at some point, these companies have got to figure out where they're going to go. The investors want to monetize that investment. And so I'm hopeful that we'll see something change here in 2024, but not seeing anything yet.
OK, we have a minute or two left here. Any questions in the audience?
Go back to your comments on bank consolidation. You said you weren't seeing it. But it seems that the general point of view is that these smaller companies are going to have higher capital restrictions, higher emphasis, need to spend more on technology, and being in a generally weaker position to serve customers in the banking universe. What's the push and pull on having a weaker customer base versus being the technology provider that helps them?
So the weaker technology base assumes that's a broad statement. The customers that do business with us today are generally well positioned. So if you think about it, we're doing regional banks and community banks and credit unions. We're the dominant player on the credit union side of the industry. Credit unions have a lot of money to spend on technology. That's a primary focus for them. So no slowdown of any kind on the credit union side of the business. On the banking side of the business, most of our customers and I can't speak universally, but most of our customers are very financially sound, well-capitalized, well-positioned, and well-run financial institutions. So do they have challenges? Sure. But they've always had challenges. It's funny to me how today people kind of assume that the banking environment is much worse than it was even five years ago.
I mean, think about five years ago. Their net Interest Margin spread was nothing, right? And they were figuring out how to make it work. And they were spending money on new technology. I wouldn't say anything is different today in the overall. The different pieces, the levers have changed. But the overall environment for banks today is not much different from where it was before. It's just that the drivers of risk and the drivers of their challenges are different. CRE today is a big topic, right? Five years ago, nobody was talking about CRE. Today, it's commercial real estate. And now what's the exposure of a banker when it comes to commercial real estate? Five, six, eight years ago, it was all about these banks that were invested in an oil field or in energy and what's going to happen to them. They all managed through it.
They figured it out. Now nobody's talking about those banks that are investing in the energy environment. So it's cyclical for bankers. They figure out how to deal with it. And they spend money with us. And I'm just not concerned that the banking environment is going to dry up and go away, with the exception of the very smallest ones, which I mentioned earlier. It is tough if you're the really little guys, which we don't serve. That's why they're selling out to the larger mid-size and regional banks.
All right, great. I think we're going to have to wrap it there. Thanks, Dave.
OK, thanks, everybody.