Jeremy Barnum: Matters just that it’s really just our primary bank relationships. And that’s the core of the strategy.
Matt O’Connor: Yes. I mean, again, I 100% agree, but we’ve never seen kind of loan-to-deposit ratios for banks like yours this low. So you could just let deposits run off at a modest amount for quite some time to make the decision not to pay up. I mean I assume that’s a trade-off that eventually you’ll.
Jamie Dimon: That’s a little more complicated because that – a lot of that loan to value ratio is lower because of regulatory stuff, LCR, capital ratio, et cetera.
Matt O’Connor: Got it. All right. Thank you.
Jeremy Barnum: Thanks.
Operator: And for our final question, we’ll go to Charles Peabody from Fortalis Partners. You may proceed.
Charles Peabody: Good morning. Jeremy, on Page 4 of your presentation, you showed some liquidity metrics. And there’s been a meaningful deterioration or I shouldn’t say deteriorating depletion of some of that excess liquidity obviously for First Republic primarily. So my question is how quickly do you want to rebuild that liquidity because as I look out towards ’24, there’s probably a half dozen variables that are going to make liquidity a premium event to have excess liquidity, so that’s my first question is what’s your plans for replenishing that liquidity?
Jeremy Barnum: Yes, Charles. So I know we talked about this a little bit at Investor Day, right? So as I said in my prepared remarks, yes, when you think about half of the change in the bank LCR number is consequence to First Republic. And the rest of it is just the expected decrease in to someone deposits flowing through into our HQLA balances and the bank LCR ratio. So that’s all entirely as expected. And therefore, I think that the replenishing notion is not correct. In fact, obviously, we still have ample of liquidity. Now if you want to project trends forward, that’s a different story, but that’s sort of the business of banking, we’ll adjust accordingly in terms of our asset and liability mix across different products and to ensure compliance ratios and quarter’s balance sheet principles as you would expect from us.
Jamie Dimon: And I would just add that just look at the at the top of the page in the press release, $1.4 trillion of cash and marketable securities even we get down to no excess, we’re going to have like I’ve got the exact number, $1.2 trillion. I think we have excess liquidity. And the liquidity ratio is slightly some difference. I think the studies according to system and of course, we do multiple things to change this overnight in one or two.
Charles Peabody: So sort of wrapped into that as a follow-up. If you take your $87 billion forecast for NII this year and that implies at least one quarter of maybe $22 billion of NII, and you take your eventual forecast of mid-$70 billion of NII at some point in the future, that would imply at least one quarter of $18 billion of NII. So that’s about an 18% drop. And if you hold the balance sheet steady, you’re talking about a 30 basis point drop in your margin – your NIM to get to that from $22 billion to $18 billion. I mean what is driving – is it really the deposit? Or are you thinking in terms of interest reversals as credit deteriorates? Or is it rebuilding of liquidity? I’m just trying to get a better sense of what the impact?
Jeremy Barnum: Yes, Charlie, I would think about that as being really entirely a deposit story. It’s not that complicated, right? I think we did this. I think it was either in the fourth quarter or in the first quarter, but we put a little chart on the page just in very simple terms, it shows like what the dollar consequences are whatever, like a 10 basis point change in deposit rate paid in terms of NII run rate. So whether it’s as a consequence of migration from lower-yielding to higher-yielding going from 0% to 4% CD is obviously a big impact on margin or whether it’s because savings reprices relatively small changes in rates there are kind of a lot of money when you’ve got a couple of trillion dollars of deposits. So it’s really not any more complicated than that. And that’s why we’re being so forceful about reminding people about what we expect that trajectory to be
