Hey, I just wondering on the deposit side, if you can help us understand, there is obviously the ongoing mix shift, which you referred to and gave us a lot of great detail on it. I’m just wondering, as you think forward, how much more mix shift are you expecting in terms of DVAs as a percentage of total deposits? And how do you expect that to also look as you think across the businesses with regards to just where customers are moving funds incrementally? Thank you.Brian Moynihan Yeah. I think, Ken, we think this — everybody thinks this as a big bulk thing, Bank of America, but it’s really — and then looks at broad categories of interest-bearing and non-interest bearing accounts and treasury. You have to really think about customer bases and what they do with their money.
And so, there is transactional cash, whether that’s for consumer running their household day-to-day or a wealthy consumer running their household day-to-day, which may have different level of expenses. And then, the commercial customers, who run their business day-to-day and then have excess cash from that if they are successful, and then how they all play that through. So I think — we think, transactional cash and investment cash.You’ve seen a lot of investment cash as — so to speak. As Alastair mentioned earlier, we price competitively for that, that moves around. But the good news is, we have a massive investment platform where we put that money to work for our customers if they don’t need to manage their day-to-day household.So, in our NII estimates, our view of what happens in the future, I think, the key for the consumer business is to remember that, they’ve got $700 billion of excess deposits over its loans.
It’s generating a lot of excess deposits that grew $300-odd billion from pre-pandemic, it has been stable. The checking balances, if you look at those charts we gave you, they show you the near-term movement are stable. That generates at a total all-in cost of 10 basis points to 15 basis points, a lot of the value in our franchise, and meaning — including interest-bearing part of that franchise when you think about deposits across time and in like businesses.So, you’d expect some of those trends to continue in terms of customers have excess cash, putting it to work differently. Here, we expect the deposit rates to move to continue to match the market. But the broad value of this deposit franchises driven by the money people leave us, because it’s transactional cash, which is a motion, and we don’t pay interest on, and that is both the consumers, wealthy customers and businesses.So, it’s hard.
It’s a very detailed question of which we spent a lot of time looking at or the team does, as you might imagine.Ken Usdin Okay. And the other question is just then, Alastair you walked through how you’ve been changing the composition of the securities portfolio and still benefiting from those variable rate swaps. I’m just wondering if you can help us understand what happens from here in terms of — or should you continue to get benefits from those variable rate swaps? And then, also just — do you — have you done any positioning — repositioning underneath the surface? It looks like there were some securities losses. So, how much room do you have to continue to kind of rework the portfolio and grind more income out of the book even as you shrink it?Alastair Borthwick Yeah.
So, Ken, think about — I mean, the easiest way to think about those treasuries, they’re swapped to floating, so they’re essentially cash. And, actually, this quarter, we ended up converting some of them into cash, just because it’s simpler, it’s simpler for everyone to understand, and this is, obviously, a pretty good bid for treasuries this quarter. So, we just converted them into cash. That’s what accounted for some of the securities loss there, it was a couple hundred million.But I think the way to think about it is, as the overall securities portfolio — remember, we’ve got cash, we’ve got available-for-sale, you can always think about that as enhanced cash, and we’ve got hold-to-maturity, as that continues to pay down, we’re just sweeping it right now into cash.
That’s something I’ve talked about in the last couple of quarters. And we’re putting in cash, because: number one, it’s a really high-yielding asset; number two, it gives us a lot of options during a period of volatility. So, pretty straightforward at this point.Ken Usdin Okay. Got it. Thank you.Operator Our next question comes from Mike Mayo with Wells Fargo. Your line is open.Mike Mayo Hi. Well, I guess, the topic of the day, week and the month is, to what degree are your assets matched with your liabilities? And I’m staring at Slide 11, and you’ve seen the front page of many papers, highlighting your unrealized securities losses. You highlight the yield on your securities at 2.6%. You highlighted your held-to-maturity portfolio at eight years, that would all suggest to some that you’re not so well matched.
On the other hand, what you don’t provide or at least I didn’t see it, the change in the value of your deposits or even the duration of your deposit. So, the basic question is, can you describe to what degree your assets are matched with your liabilities? And where you think you may have been off or on the mark?Alastair Borthwick Yeah. So, Mike, I’ll start. Brian can add anything he chooses to. But one of the reasons that we spend as much time laying out the deposit franchise is because in a rising rate environment, you’d expect obviously that bond markets are going to turn negative. And, at the same time, you and we have been expecting, as rates go up, the NII would rise, because the deposits are so much more valuable in that environment. What we laid out for you and for everyone to see is just how broad and stable and diversified is this deposit base.
