Jason Tyler: Morning Gerard.
Gerard Cassidy : Hi Jason. Coming back to the expense topic and conversation, on the salaries, can you share whether this–the cost of those salaries, is it going more to entry-level folks or is it more your senior people? Then second, are you at risk of losing people, which is why you had to bump up salaries? Maybe a little more detail about just the salary portion.
Jason Tyler: Yes, so two very different dynamics happening. The actions we’re taking this year are not across the board, much more targeted than they have been historically and very centered, frankly, around technology and some operations-oriented functions, effectively. That just gives you a sense of where we’re going. Then to why we’ve had some of the increases, some of the salary increase we had last year obviously was an inflation-related higher than average merit increase, but a lot of the growth we had last year was doing off-cycle adjustments to retain talent, specifically in the wealth management business. We think that that’s largely done at this point. You can never claim with certainty that that’s fully over, but that was meaningful.
You know how important that franchise is to us and how important that talent base is, and so we were going to defend that base. That episode, that seems to be over at this point and we’re more to a business-as-usual growth rate across the organization, but we’re identifying areas where we can get significant salary run rate savings and getting after those aggressively.
Gerard Cassidy: Very good. Then as a follow-up, can you share with us on the sale of the fixed income portfolio which resulted in losses that you reported, can you give us some color on what types of securities were sold and the yields of those securities, and then by reinvesting the proceeds from that sale, how long will it take you to earn back that loss that you had to take to exit the portfolios?
Jason Tyler: What we looked for were securities that had the combination of a couple things: one, poor RWA treatment, and secondly lower coupon, lower yield, and third that they still had significant time to maturity. That bucket ended up being $2 billion, $2.5 billion. The coupon on those was in the 2% to 2.25% on average, and the reinvestment of those coming in at–you know, think about earnings on reserve balances at the Fed in the 4.5% range at this point. In terms of the payback on that, it’s more like 3.5 years, but remember from a regulatory reporting perspective, we had already stripped out the unrealized loss in that portfolio, and so the drivers of this were very largely around the opportunity to improve capital ratios, not that we needed to improve capital or liquidity – we didn’t, but seeing the opportunity to benefit CET-1 in the form of lower RWA treatment coupled with improved liquidity ratio, and at the same time not hurt the economic value of your earnings stream, was very attractive to go after, and that’s really what led us to do this.
Gerard Cassidy: Great, thank you.
Operator: Thank you. We’ll take our next question from Steven Chubak from Wolfe Research.
Steven Chubak: Hey, good morning. Gerard actually asked my question, but I did want to clarify one item relating to the securities portfolio repositioning, which is whether you have any appetite to actually engage in further repositioning of the book from here.
