Investor Presentaiton
4
Resilient business model with natural hedges to market volatility
We are well positioned to benefit from rising interest rates
Client Cash Balances (16) ($B)
■ICA Sweep (EOP)
CCA (EOP)
■DCA Sweep (EOP) ■Money Market Sweep (EOP)
--Average Yield(17)
$66.8
Annual potential Gross Profit* benefit from rising interest rates
Over the last interest rate cycle, our deposit beta averaged -15%
•
Deposit betas were much lower early in the cycle, averaging ~2.5% over the first 4
Fed rate hikes
$57.1
$3.3
$3.2
.
After the first 4 rate hikes, deposit betas averaged ~25%
$1.7
$48.5
$12.7
$1:3
$16.1
.
$36.0
$8.2
$31.0
$32.5
$1.2
$9.3
$4.9
$1.1
$1:9
$37.3
$2.8
$5.1
$5.0
$47.7
$4.2
$24.8
$24.4
This cycle, deposit betas were consistent on the first 100 bps, and favorable on
subsequent hikes
Applying historical deposit betas to our current cash balances would yield:
~$60M of Annual Gross Profit* per subsequent rate hike, at a -25% deposit beta
Estimated Interest Rate Sensitivity based on current balances +
$22.9
$30.0
172 bps
216 bps
Fed Funds rate target range as of October 27, 2022
~$1,235M
105 bps
117 bps
75 bps
100 bps
~$1,175M
~$1,115M
~$1,055M
-$995M
~$930M
2017
2018
2019
2020
2021
Q3'22 LTM
~$865M
~$800M
~$720M
Average Yields (in bps)
ICA Sweep
113
184
240
133
100
137
DCA Sweep
90
183
211
53
24
66
MM Sweep
64
73
73
22
3
23
CCA(18)
84
188
208
56
15
71
+200 bps +225 bps
+250 bps +275 bps +300 bps +325 bps +350 bps +375 bps +400 bps
Fed Funds rate target range (bps)
Average
105
172
216
117
75
100
Client Cash %
5.0%
5.7%
4.3%
5.4%
4.7%
6.4%
of Total Assets
200 225 225-250 250-275 275-300 300 - 325 325-350 350-375 375-400 400-425
Deposit Beta
10%
10%
20%
20%
20%
25%
25%
25%
25%
Actual
Prior Cycle Average
Note: Totals may not foot due to rounding
LPL Financial Member FINRA/SIPC
t
Assumes change based on Q3 2022 end of period cash balances. Gross Profit* benefit is measured relative to a Fed Funds target range of 0 to 25 bps.
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