“Now with higher rates, we'd also expect paydowns to slow.”

In context

“ugh as expected, we would expect that process to return. The 2015 to 2019 period is a reasonable reference point for our expectations this cycle, but there are a number of different dynamics this time around that could influence that behavior. At the same time, we'd expect to see continued growth in bank lending, as Rick discussed, as we improve the PAL process, make our lending solutions available to legacy Ameritrade clients and continue to increase awareness of our very competitive mortgage rates. And given the way the LCR, or liquidity coverage ratio, calculation works, we need to maintain stable or even growing free credit balances within the broker-dealers to support our margin book. So any sorting that happens there needs to be replaced by transferring balances out of bank sweep. Now with higher rates, we'd also expect paydowns to slow. Now we have plenty of liquid assets and borrowing capacity to support outflows. But we'd rather not sell assets potentially at a loss or have to rely on higher-cost FHLB borrowing on a long-term basis. So we need to ensure we have enough liquidity at the banks to enable these client cash allocation changes without selling securities or borrowing from the FHLB. Our investment portfolio in aggregate looks pretty similar to how it looked 1 year ago with a fixed floating allocation of 90-10 and a duration around 4.7. But those numbers are higher than in 2015, which means that the upside from higher rates is very much still there, though the benefit will accrue to us over a longer period of time than the last rising rate cycle. We are, however, carrying more cash in the portfolio. 15% or 16%”