Good day, everyone. And welcome to today’s Bank of America Earnings Announcement. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. Please note this call may be recorded. I will be standing by should you need any assistance. It is now my pleasure to turn today’s conference over to Lee McEntire, Investor Relations. Please go ahead.

Good morning. Thank you, Katherine. Thanks for joining the call to review our first quarter results. By now, I hope everybody’s had a chance to review the earnings release documents that are available on the Investor Relations section of the bankofamerica.com website.

Thank you, Lee, and good morning to all of you, and thank you for joining us to review our results. It has been an eventful quarter, but I hope all of you are safe and your families are well during this war on the COVID virus. As you think about our quarter, our decade plus long discipline of responsible growth has resulted in us strengthening our balance sheet and making investments in technology and people and talent over the decade has helped us prepare for this environment. Today, we are going to do three things with you. First, I am going to provide a couple high level thoughts on the quarter. Second, I am going to make sure you know how we are supporting our teammates, our customers, our communities and delivering for you, our shareholders, during this crisis. And third, Paul will cover the results in more detail. I will start this discussion by covering the chart on slide two, along with the comments on slide three which go with the chart. Given the volatility in the last couple months and the global slowdown, I am proud of Bank of America and our team’s results. I want to thank my 209,000 teammates across our company for all of their efforts this quarter both in the front-line roles and support functions. It’s been a company-wide effort to continue to serve our customers well during these times. As I said many times, we are in a war against the COVID-19 and at Bank of America we are doing our part to help fight the effects of that war. We do that by living our purpose. We are helping people manage their financial lives through this crisis. My teammates know they are playing a critical role for their clients, whether they are people, whether they are companies of all different sizes and institutional investors. Their role is to help keep the economy moving as best we can during this health care crisis. Their role is -- we have seen major disruption in the financial markets that affected every line of business as customers move to stay-at-home status through voluntary or involuntary measures.

Thanks, Brian. Good morning, everyone. I am beginning on slide eight with the balance sheet. Overall compared to the end of Q4 the balance sheet expanded $186 billion, driven by an increase in deposits of $149 billion. Deposit growth in excess of our loan growth was invested primarily in cash or cash equivalents. As Brian mentioned, the team did an incredible job of not only providing our Global Markets clients needed liquidity from a mid-March spike, but also reducing those levels by the end of the quarter. Shareholders’ equity of $265 billion was stable with year-end but included some offsetting factors. AOCI increased $6.5 billion, reflecting several factors, but was driven by a $4.8 billion improvement in the valuation of AFS debt securities. Offsetting this increase to equity were two items. Share repurchases and common dividends of $7.9 billion exceeded our $4 billion of earnings given the reserve build this quarter. And as a reminder, we booked a reduction in equity on January 1 by adopting CECL. Now with respect to CECL, we elected the five-year transition option made available under the fed rule to delay any capital effects of CECL until 2022. The January 1 reserve build plus Q1’s $3.6 billion build equate to a total increase in the reserve of $6.9 billion since year end. Assuming no regulatory relief, including the original relief planned for day one adoption, our CET1 ratio would be 22 basis points lower than we reported. The relief received in late March accounted for 12 basis points of the 22 basis points. As you know, a portion of the CET1 impact of future reserve increases or decreases during the emergency period will also be delayed until 2022. Beginning in Q1 of 2022, we will begin phasing in the 22 basis point reduction for these…

We will take our first question today from Betsy Graseck with Morgan Stanley. Please go ahead your line open.

Hi. Good morning. Thank you very much for all the detailed insight, in particular your slide that talked about the percentage of folks who have been asking for deferrals is extremely interesting, as well as the detail on the reserving analysis. My question has to do with how you thought about that reserving analysis. I know we have been through stress tests here for 10 years now and it would just be helpful to understand how you decided to size the very significant increase in the reserve and how you think it trajects from here?

Paul, why don’t you hit that, please.

Yeah. Sure. So let me ask the last part -- answer the last part first. We put a reserve on our balance sheet that we think reflects the information that we had at the end of Q1. And so in terms of what’s going to happen in the future, that reserve is going to go up or down based upon the facts and circumstances and our view of the future when we get to the end of Q2. I think when you think about reserves, you have got to really focus on loan mix and the quality of the portfolio and then you have the added variable under CECL of everybody coming up with a view of the future. We sized our reserve build in Q1 by weighting the number of economic scenarios, all of which assumed a recession of various depth and longevity, and that included assuming some tail risk similar to what’s in the severely adverse scenarios. So when we weighted the scenarios that produced a -- clearly a recessionary outlook, which included a significant drop in GDP in the second quarter with negative GDP growth rates extending well into 2021. We also considered the impact of various groups of credits and stressed industries. And while small relative to the impact of scenario weighting, we incrementally factored that analysis into the sizing of our reserve build. Obviously, there are many unknowns including how government, fiscal and monetary actions will impact the outcome, but we can try to consider that as well. We also had to consider how our own deferral programs will impact losses. But perhaps the biggest unknown is how long economic activities and conditions will be significantly impacted by the virus.

So, Betsy, I might add a couple things. If you sort of benchmark, this has nothing to do with setting under GAAP, it’s just sort of, okay, now you have it, let’s look at it. I think we are about 65% of last year’s fed supervisory severely adverse total losses type of numbers. That’s one way to think about it. As you -- and then another thing to think about is the construct of the portfolios. Those of you like yourself who have been around our company a lot, I went back and started saying sort of are we sure how much different we are and people forget things that won’t mean a lot to people on the phone, the gold option program, which was a restructuring of card debt that went on in the mid-2000s, it started to go into the crisis in 2008 time frame at $25 billion, eight quarters later, six quarters later, something like that, it’s down to 12, half of that was charge-off. There’s none of that around now and so it’s not only the FICO scores and all of the things that you have, it’s also that there’s pieces of the portfolio that cost us a lot in the last crisis that aren’t there. But let me -- and that’s just how we positioned the portfolio. So even some of the industries which people -- we are focused on as a credit grantor and you are focused on as an analyst are relatively 1% in this industry or that industry, so the list is sort of concerning industries entertainment, travel, things like that, we have low exposures to because of diversity of mix of portfolio. You touched on the deferrals and let me just give you a couple perspectives on that. One, on that…

It’s a very impressive reserve ratio, and in addition, your CET1 stayed relatively high this quarter as well. I just wanted to ask a follow-up, Brian, around how you are thinking about the dividend, it’s been question that many investors have been asking and maybe you can give us a sense as to how you think through that question?

Let me just, Lee has corrected me. It’s 65% of the adverse, not severely adverse, I think, is what Lee is telling me. We are in two different locations, so usually he can wave at me when I have made a mistake. But in terms of the dividend, we kept the dividend payout ratio below 30% of the sort of normalized earnings level and we did it for a reason that one of our operating principles is we wanted to maintain a dividend. And given what we know, we have earned twice the dividend this quarter at $0.40 versus $0.18 payout ratio and we expect that to continue and that shows you the 100-plus basis points, 130 basis points of excess capital. We have tested it lots of ways as you might expect, as we talked to our Board about capital management, as we talked to our Board about dividends. On any given time, we are showing them severely adverse cases, adverse cases and thinking through the pretax PPNR capability of withstanding different reserve builds and outcomes and so that’s what we are doing and trying to keep it going.

Thank you.

We will go now to John McDonald with Autonomous Research. Please go ahead.

Yeah. Hi. Just a quick follow-up on that, Paul, I know you mentioned in terms of the macro assumptions it’s a weighted average, but what you described is kind of a 2Q deep dive in GDP and then continuing negative for the rest of the year. Is that kind of the central case, is there any more details you could provide on that as we compare different banks and what macro assumptions are embedded into the reserve, it’s helpful to know the kind of the maybe central case of assumptions? Thank you.

Yeah. I mean, just to be clear, what I said was, it’s a significant drop in GDP in the second quarter and then negative GDP growth to extend well into 2021, I think, approaching all the way to the end of the year. So we view it as a recessionary outlook. We wouldn’t describe it any other way. None of the scenarios that we are looking at are anything other than a recession, and again, we have captured sort of the tail risk of a severely adverse situation. In terms of providing -- yeah, go ahead.

No. No. Go ahead, please.

I was going to say in terms of providing specifics on one variable or another, you have got a lot of variables that go into these models, many, many, many variables and so we really believe that to provide that level of detail could be a little misleading. It’s -- unless you have the full context of all the factors that we considered when we set the allowance, picking one or the other and starting to compare here or there just to us I think would be misleading. Plus, very importantly, the impact of all those multiple inputs that go into the process will be different from each bank depending upon the bank’s loan mix and very importantly the quality of the loan portfolio that they have been putting on the books for years. I think, Brian, just sort of talked about it, but I will say it again, we have been very focused on prime and super prime customer borrowers for many years now. So the impacts to us of all those inputs is going to be different, and I guess, that’s what all the information I would want to give you about like one input or another. Hopefully that helps you in terms of how we think about it.

Yeah. And the reference point to CCAR is helpful too. It sounds like what you provided for built into the reserve is about 60% of the cumulative losses from the fed’s adverse…

Yeah.

…in 2019?

Yeah. Again, as Brian said, that’s more of an output, not an input, right? We are developing scenarios based upon the information we had at the end of the quarter. But it is interesting and it’s maybe helpful for all of you in terms of comparing reserves to really think about the loan mix, the quality of the portfolio and then, of course, what people assumed about the future. But in terms of the loan mix and the quality of the portfolio, there is an independent view out there. There’s an independent view every year. And so if you look at our losses in the severely adverse -- the fed’s stress test, our losses under the severely adverse or our losses under the adverse and then you look at our reserve and you divide by those losses, you are going to get percentages that are in the range or better than what you are seeing across the industry.

Okay. Got it. Thank you.

And remember those tests basically are an independent way to evaluate the quality of somebody’s portfolio and the mix of somebody’s portfolio. So we think, again, we didn’t size it that way, but we think that’s an interesting way for you to kind of get some sort of independent perspective on allowances.

Yeah. I think it’s helpful for us to compare across banks that way. Thank you.

You still have the issue, though, by the way, that every bank is going to have a -- this is the first quarter we are all doing CECL and everybody is going to have to develop their own view of the future. And there’s no evidence right now that you can point to of asset degradation. There’s a little bit of NPLs and a little bit of reserved criticized. So we are all doing this based upon just our view of the future based upon all those inputs that we use in our models.

Got it.

We will go now to Mike Mayo with Wells Fargo. Please go ahead.

Hey, Paul. Same question, maybe more specifically, how much more could reserve…

Same answer, Mike.

Same answer?

Yeah.

Well, just how much -- I mean, how much more could the reserves get built in the second quarter and then when you define a significant drop in GDP, how do you define significant? I mean, look -- I mean, the stock pre-market looks like it’s going to open down 6% or 7%, if my numbers are right? And you just guided for better NII and you earned your dividend at least two times, up to four times, depending on how you compute, your book value grew. You have good capital ratios. You have the balance sheet strength to take the additional charges. So why not just take it for like the worst case that you are allowed to do so and communicate that and say all right, your capital is still fine. So you had one of your peers kind of telegraph that. You seem to be hesitant to do so, given all of the different variables, I understand. But can you give us any a little bit more guidance for reserve builds say in the second quarter or the third quarter?

Yeah. Yeah. Sure. Again, like you said, we have the liquidity, we have the capital on our reserve build if you look at independent perspectives from the fed or other sources, our reserve bill as a percentage of future losses under multiple scenarios that they publish is higher or in the range of our competitors. So that’s a lot of information for you right there. In terms of your question about, hey, what’s the likely reserve build in the future? If we thought we were going to have to add more reserve build in the future, we would have put it into this quarter. That’s how the rules work. You reserve for your expected lifetime losses. So our reserve build reflects what we think as of the end of the quarter we are going to have to have in losses for the life of the assets on our books. Now when we get to the end of the second quarter, we may have a different view of the future and so we may release reserves or we may increase reserves. The quality of our loan book won’t change that much because that doesn’t change that much in the quarter. The mix doesn’t change that much because that doesn’t change in the quarter. We have built this loan book based upon years, years of underwriting standards. And so it will go down -- the reserve will go down in the second quarter or go up in the second quarter, but it will be based upon a change in our outlook on the future.

Got it. If I could follow-up with Brian then, I mean, clearly, the biggest input is when does the economy come back online. And Brian, you and your firm have as many touch points nationally as anybody. There must be some underlying thought process that goes into the reserve build and the losses about when the economy comes back online, kind of what’s your base case, best case, bad scenario, what are you seeing, what are your thoughts?

Well, one thing that is different, Mike, and you well know is when our authority embedded in governors, the mayors, and the President to tell us what to do is overriding here. So we could have a view of what can happen, but given the healthcare crisis as opposed to demand changes and things that would be out of the general economic flow or credit risk because commercial real estate got overvalued. The things that we have dealt with in our lifetimes as you have dealt with, this is just different. So we have to remind ourselves always this is going to come down to solving this healthcare crisis and is number one. Just to give you some facts of where we stand and we will see this play out. As I said earlier, if you look at sort of the weekly flow of payments across all of means, cash being taken out of the ATMs and spent through checks written through ACH wires and credit and debit card. That was around $65 billion a week in January/February and now it’s running $50 -- like $51 billion, $52 billion average for the last couple weeks. But you are seeing that rate of decline flatten at this point and if you go and look at geographies based on the data we see, we have seen it sort of flatten. So you are seeing what might be a relatively -- and that’s after the unemployment claims have been filed and we are seeing the unemployment come into the accounts. You are seeing a rate of -- the rate of declines sort of flatten and then as you look at it sort of compared to the rate of decline year-over-year by week and things like that and different types of industries. They have…

All right. So that’s why you say reserves could go up or they could be relieved, you just don’t know yet?

Yeah. I mean, it’s just -- that’s -- people are -- we all want to see where the end is, you included, Mike, we do too, but the question is we have got to wait for some time to pass to have a feel for that.

Thank you.

Our next question comes from Glenn Schorr with Evercore ISI. Please go ahead.

Hello. Thanks very much. Maybe one more quickie on allowance and reserves. When I look at the healthy reserve on card, it makes sense given the macro backdrop we are looking at and unemployment and kind of the linear relationship with unemployment and card. If you look at say U.S. commercial and non-U.S. commercial in and around 1%, that’s obviously a lot more than we have had lately, but not necessarily the worst thing you could predict given the world we are looking at. So I guess my question is when you talk about the quality and the mix of business, and all of the things that you gave us. Is the -- what I consider the -- not as severe reserve on the commercial side assumption of not knowing the timing, the mix of business or is it where you sit in the capital, meaning even if some of those companies run into issues, your historical experience in the last bunch of years has been actually really, really good. So I know it’s probably all of those, but I am just trying to see if you could talk towards that on the commercial side?

Look, we have got $2.16 billion on commercial real estate. Given how we have run our commercial real estate business over the last 10 years, especially relative to others. We feel that’s up from $1.6 billion at January 1. We have got $1.11 billion on U.S. commercial. Those commercial losses, they just don’t run as high because of collateral and other protections we have in the structure. So we feel pretty good. If you look at total commercial, we are at $1.16 billion. So we feel good about where we are. And again, it’s when you sort of add all of that up and you just look at it relative to the losses that people are projecting including the fed, whether it’s an adverse scenario or it’s an adverse scenario, you are going to come out with percentages that are pretty healthy on an absolute basis and relative to our peers.

And Glenn, I’d add one thing. Let’s go back to the beginning on the pretax PP&R, which we all learned after the last crisis. But that earnings power to absorb pay as you go losses on the consumer side in terms of card charge-offs and things like that or building reserves and then going through on the commercial side, which is what happens typically. That earnings power is I think what we feel has us in good stead in terms of the ability to absorb whatever circumstances play out here and still -- with more liquidity than the start of the year, more capital than we need, 130 basis points more capital and the PP&R volume that lets us drive through it. And if you think about that PP&R when you look at the stress test and stuff, we are running a lot higher than the stress test assumed, because they assume there’s market losses and things like that, which we didn’t experience even in the most volatile periods of time in the markets history. And so I think as you play this out that -- whether we can all talk about the reserve of X or Y or Z per thing, which is what you all are focused on and should be focused on, the reality is how much earnings capacity you have to keep generating capital and keep generating earnings that you can offset whatever comes at you and that’s what we feel good about.

That…

Thank you both.

If you study that portfolio, remember, it’s mostly investment grade. And if you look at it the other way around, if you looked at the amount of loans or revolvers that we have in leveraged finance, private equity sponsored leveraged loans, for example. That’s less than 1% of total exposures. We don’t have any CLO exposures because we don’t put any of that in our ALM portfolio. We have got a fraction a tiny bit in Global Markets for trading purposes, so that we -- that commercial portfolio is relatively high-grade.

Great detail. I appreciate it. Thank you.

We will go now to Vivek Juneja with JPMorgan. Please go ahead.

Just…

Hello?

You still there, Vivek? Is it us?

Vivek, we are not able to hear you at this time. Please check the mute function on your phone.

Operator, let’s move on to the next one. We will pick him up later.

We will go now to Matt O’Connor with Deutsche Bank. Please go ahead. Matt O’Connor: Good morning. The NII guidance, obviously, helpful and coming off a much better than expected 1Q, just wonder if you can give a little more detail in terms of I assume some of the sharp drop is higher bond premium amortization, lower trading, and then, obviously, kind of coordinate pressure, is how I think about the three buckets. I don’t know if that’s right or you want to parse it differently, but any additional color would be helpful? Thanks.

Yeah. I mean, we did see bond premium amortization in Q1 is always sort of seasonally low or lower. We do expect an increase in Q2, given the decline in rates in Q1. You have got to remember that prepayments generally lag moves in NII or they proceed moves in NII -- the rate move proceed NII impact by six weeks to eight weeks. What else did you ask about? Matt O’Connor: I assume trading benefit 1Q…

Yeah. Matt O’Connor: …and is being factored in and then just kind of…

Yeah. Matt O’Connor: …call it pressure from the rate environment is the third bucket?

Yeah. Yeah. Trading definitely, we are liability sensitive in Global Markets. But it’s not a huge impact and it can bounce around quarter-to-quarter depending upon the type of assets that they are booking and whether they bought them at par or above or below par. That influences whether profits show up or revenue shows up in NII or shows up in market making or similar activities. So we -- that’s why we don’t give guidance on it because it can change pretty rapidly depending on what they are buying and selling for clients in Global Markets. But right now, it was a little bit liability sensitive and did help a little bit in Q1 and it will probably help a little bit in Q2. Matt O’Connor: Okay. And then as we think about the balancing growth component, obviously, 2Q average balances will benefit from the run-up on a period end in 1Q. But I would think as you kind of look to the back half this year and beyond, some of those line draw downs in commercial start to get paid off, so that maybe it’s tougher to grow the balance sheet or at least tougher to grow loans? I don’t know if that’s the right way to think about it?

Yeah. I mean, there’s no question that commercial revolver lines which spiked in March, will start to pay down once economic conditions start to improve. But obviously the timing of that is very uncertain. So I think we are just going to have to wait and see. Clearly, we are going to see some carry over from these draws in Q2 and we may see a very significant amount stay with us for some time, we will just have to wait and see. Obviously, deposit balances also benefit NII because you don’t necessarily have to make a loan. You can earn on those deposit balances and they are way up as well and they may be with us for a little while, we will just have to wait and see. Matt O’Connor: Okay. And just last quickie.

Just so our NII guidance, I am not going to get into the details, but our NII guidance, of course, assumes some sort of runoff. We are making some sort of guesses at this point about what the runoff would be in both loan and deposits. Matt O’Connor: Yeah. Understood. And then, just lastly, a quick one on the spread of the commercial lines draw downs, any rough numbers on that, I am often asked that question.

Yeah. Sure. The spread on the draw downs were no different than what they were pre-crisis because they are just draw downs. They are existing arrangements. We worked with some clients to adjust the liquidity we were giving them. There were a few new loans in there that were at higher spreads, but most of the spreads were the same as were spreads pre-crisis. So you are not going to get a spread benefit on those draws. Matt O’Connor: Maybe like a LIBOR…

I think. Matt O’Connor: …plus 150 or 200?

Well, given the quality of our loan book, I wouldn’t go as high as LIBOR plus 150. Matt O’Connor: Got it. Okay. That’s helpful. Thanks so much.

In terms of who drew.

Yeah. In terms of who drew. Yeah. Matt O’Connor: Great.

Yeah. But one thing, just to back up, there will be a transitory impact we should all hope of these draws and stuff. And that means more stability in the market, more reopening of the economy. So but what isn’t transitory is the good core work that went on in our Consumer business and our Wealth Management business and the treasury services, the core growth levels that will continue through even if the deposits that people have built go back into other forms or get used up. And so I think that’s going to be the trick, for a little while, we will all going to be pre-occupied with the pace of those loans dropping off, et cetera. But the reality is over the long-term we are going to be based more on the way that underlying has performed going into this/ And frankly, the amount of activity that can continue in the underlying business given this COVID virus situation and we -- our officers are making contact. Our wealth managers, we are continuing to add accounts in various businesses, not at the rate that you would before. But -- because just necessarily is not face-to-face meetings taking place, but you are seeing the Wealth Management contacts are up. You are seeing even the referrals between our lines of businesses continue. It’s just at a lower rate because of the necessities of the face-to-face meeting limitations, but those will come back as soon as we can get back in action.

We will go now to Brian Kleinhanzl with KBW. Please go ahead.

Yeah. Good morning. Quick question, I know you commented on the consumer deferrals that you were seeing. But what’s kind of been the trends on the corporate side as well and kind of what’s been the inbound with regards to using some of these government programs from your clients out there?

In terms of the government programs?

Correct.

We have -- yeah. We -- yeah, 12 days ago, we started taking applications in the PPP program. We have had hundreds of thousands of applications. We are processing them in accordance with the guidance that was given by treasury to get the work done and then submit them, thousands have been through the SBA and have a number and we have thousands -- many thousands in the hands of clients that are signing promissory notes and we are funding them. So that is still, I think, for the whole industry the real impact economic of the money traveling out is coming, will come over the next period of time here. Today, we received the first major distribution of the direct payments in terms of the $1,200 stimulus payment types. We are seeing now the unemployment benefits, the extra $600 type thing coming through and the benefit structures we are seeing in the -- programs we are seeing both as we service the state as a provider of prepaid card type -- card access to those programs and we see in our accounts. So those programs are just barely hitting the general consumer, general business, et cetera, in term -- for us and for the industry. Our industry peers are all in the same condition. And so they will provide the stimulus they will provide is actually going to be from now on, not from now backwards, because this is a program that didn’t exist literally three weeks ago, only started two weeks -- 12 days ago and several hundred thousand people applied for it and we are processing through it as fast as we can and it’s around 10,000, 12,000 on the more commercial banking side.

Just a separate question, I know you have built a big qualitative reserve now with CECL. But kind of what are your expectations with regards to how the charge-offs will roll through given all of the deferrals that are going on, forbearance which could push potential charge-offs out to a year or more. Are you really looking that you may not see much of an uptick this year and it could really be 2021 before you start to see meaningful degradation in the charge-offs? Thanks.

Yeah. So I -- yeah, the total amounts as you saw on page five of the balance of deferrals. So if you go to the inverse of that 95% and we see of the cards are not deferred and they will pay us and stuff. So I think the question is what really happens, to your point, so we deferred somebody whose 750 FICO who temporarily thought lost their job or thought they were going to lose their job and just wanted a month, that will come back. And so I think the losses will shake out from the -- into the fall, because just the methodology is you remember, it’s to the 180 days you have to roll through all the buckets and stuff. So we will see it play out, but it’s going to be delayed. But remember, because the CECL, you are providing for your expected outcome under that delay, and Paul gave you the parameters of what we talked about already. So the question is that’s what we are putting up at the end of the first quarter and we will get the second quarter we will put it up and third quarter all based on what we think the credit costs will be of that portfolio over the cycle that’s ahead of us, down into the trough and back out the other side in a very slow matter, as Paul described. And then the real question will be…

Yeah.

…sort of people’s behavior given these government programs and the amount of extra cash going in and then on the employment, the PPP program is employ people and pay people, you get two -- eight weeks of pay to pay them out and so we will see how that all metes out to the underlying people. But so I think it’s premature, but I think it will delay charge-offs, but our reserve at any given moment reflect what we think will ultimately happen to those customers, not when it will happen.

Okay. Thanks.

And we will go now to Ken Usdin with Jefferies. Please go ahead.

Hey. Thanks a lot. Hey, Paul, just a couple of follow-ups on the NII front for you. With LIBOR expanding versus fed funds and the TED spread still wide, which typically happens obviously in times of stress. How are you expecting that to traject as you talk about your $11 billion number and just your expectation for rates in the long end of the curve?

Yeah. So we are basically factoring in a timing between LIBOR and fed funds over the year. But we are also factoring in some loan and deposit growth offsetting that. And then, of course, we have got securities and other assets maturing that we are going to replace at a lower yield and all that’s factored into our perspective that we think with loan and deposit growth, we can -- you will see NII kind of at that $11 billion level give or take roughly through the end of the year.

So when you -- with all of the cash that’s sitting on the balance sheet and like you said earlier, you are expecting some tapering of that. How -- what is the asset liability decision about what to invest and what you are putting it in, and so, like, what’s the kind of go-to investment rate versus what’s coming off?

Well, right now, that liquidity -- that excess liquidity that all came flooding in is in cash and we will have to think about what we want to do that with that excess liquidity as it becomes clearer kind of how long it’s going to stick around. If -- right now, if you just look at what’s in our securities portfolio and compare to the yields available to reinvest, they would be 50 basis points lower. But all that’s kind of factored into our guidance.

Right. And one more question on the deposit side. Can you just talk about across the businesses, what you are seeing from customers in terms of money coming out of the markets and whether it’s sitting in money market mutual funds in Wealth Management or whether its moved on to the balance sheet and just kind of how that ties into your ability to re-price deposits? Thanks.

Just to start on that, just generally customers put more cash and you saw that in the Wealth Management deposits being up $19 billion. So that reflects not only the moving money but also the reallocation in our models and things like that. So you have seen that. We have seen them stabilize. My guess is two-thirds of that was more what you are speaking about a third or so was sort of the core growth building up that we saw coming into the tail end of last year into the quarter maybe or a little less than that. But a lot of it was moving and it will move back in the markets based on the allocations and methods and in terms of deposit forms of the markets. And then on the money funds, the allocations reflected there, because of the prime money funds versus the government money funds, there’s a lot of instability around that towards the quarter. So I think this will all settle out and you will see it return to more normal when people are thinking about that. So you will see less volume growth in the balance sheet deposit driven than Wealth Management.

I am not sure what else I would add to that, obviously, we brought deposit pricing down, in Q1, you can see that in the average by product. They are going to come down further just based upon pricing actions that we have already taken that are just now rolling -- are going to start rolling into those average deposit pricing across the different types of products. In terms of growth, we ultimately saw very strong growth in Q1. There’s a lot of moving pieces there, so it’s hard to give guidance on growth from here. I just would emphasize, what Brian emphasized earlier that the underlying spike in deposits. If you look beneath that underlying spike, we still saw solid core organic growth across all our LOBs in January and February. In terms of the second quarter, with respect to consumer, you are going to have government stimulus and delayed tax payments. That’s going to be a tailwind. June clients, we will just have to see they shifted out of investments into deposits. We are going to have to see how that plays out over time. And then Global Banking, we already discussed the large deposit inflows in March, ending deposits grew $94 billion quarter-over-quarter. As the markets stabilize and economic activity returns, we do expect some component of those deposit balances to flow out over time as clients pay down their lines to pay other bills and redeploy liquidity. So we have kind of factored all that in, but at this point there’s a lot of uncertainty.

Yeah. Understood. Thanks a lot.

And we will take our final question today from Vivek Juneja with JPMorgan. Please go ahead.

Sorry about that earlier. But let me just jump in and not hold everybody up that much. In your loan draw downs, you said 90% investment grade. What percentage of those were BBB minus and what are you thinking as you reserve how many of those are more vulnerable or more at risk of downgrades?

All well over 90% were investment grade or secured. I don’t have how many were BBB minus in front of me.

Yeah. Okay. And going back to, I know just looking at the reserve build, sorry to go back to that, but it is the question of the day. On your -- you have talked about GDP staying negative well into 2021. Can you give some color on what you are thinking in terms of unemployment? How high do you see your weighted-average in 2021, if that’s the case?

No. Look, as I said before, we are not really providing level -- that level of detail because we think comparisons on this input versus that input were -- when there’s 30 or 40 inputs in the models is going to be misleading unless you have a full context of all factors.

Right. Okay.

Okay.

Okay. Another one and small business, the deferrals that you have seen so far probably going to rise, what are you thinking in terms of as you have done your reserving, what percentage of those ultimately may not make it at this point?

Vivek, if you are listen…

If that -- what is…

If you were listening earlier…

I have been trying, Brian, too many calls this morning all at the same time.

That’s right. A substantial part of those small business are in clinical practice solutions which are doctors and dentists and things like that. And you expect once they open their practice they will pay because they don’t want to lose their equipment practice. So it’s a little different than the general small business that have and that’s why that number is elevated just because of who the dominance that portfolio as a percentage of the total. So if we expect a lot of it will come back and we will play that -- see that play out as parts of the economy reopen. Thank you, Vivek. And we are going to move to close here because we have got an endpoint at 10. And so let me just close quickly. Thank you all of you for your time this morning. Number one, please keep your families and yourselves safe as we go through the rest of this health crisis. Simply put, we earned $4 billion. We added substantially to our reserves based on our view at the end of the quarter. Our capital ratio is 130 basis points over our minimums. The liquidity is increased during the quarter. But importantly, we drove responsible growth, supported our teammates, our clients and our communities and delivered, I think, for the shareholders too, given the circumstances that were going on. As we look forward, we will continue to keep you apprised of what we are seeing on our client base due to our purview. And as we see that, we will continue to try to keep people informed to help people understand how the company and the economy might operate given the stay-at-home orders. Thank you for your time and we will talk to you next quarter.

This does conclude today’s program. Thank you for your participation. You may disconnect at any time.