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 (13) ($B)
Annual potential Gross Profit* benefit from rising interest rates
Over the last interest rate cycle, our deposit beta averaged -15%
IICA Sweep (EOP)
CCA (EOP)
■DCA Sweep (EOP)
--Average Yield(14)
■Money Market Sweep (EOP)
$64.1
•
Deposit betas averaged -2.5% over the first 4 hikes, after that betas averaged 25%
$2.7
•
$57.1
$3.0
$54.6
This cycle, deposit betas were consistent on the first 100 bps, and favorable on
subsequent hikes
$1.7
$48.5
$11.5
$2.1
$2.6
.
This cycle to-date, our deposit betas have averaged -15%
$1.5
$16.1
$10.2
$8.2
$36.0
$32.5
$1.2
$9.3
$4.9
$1.3
$1.9
$37.3
$46.8
$5.1
$5.0
Applying historical deposit betas to our current cash balances would yield:
~$40M of Annual Gross Profit* per subsequent rate adjustment, at a -25% deposit
beta
Estimated Interest Rate Sensitivity based on current balances +
Fed Funds rate target range as of April 27, 2023
$24.8
$24.4
$30.0
$39.7
~$1,295M
~$1,335M
216 bps
215 bps
-$1,110M
~$1,155M
~$1,200M
~$1,245M
~$1,065M
172 bps
153 bps
117 bps
75 bps
2018
2019
2020
2021
2022
Q1'23 LTM
Average Yields (in bps)
ICA Sweep
184
240
133
100
185
239
+350 bps
+375 bps
+400 bps
+425 bps
+450 bps
+475 bps
+500 bps
DCA Sweep
183
211
53
24
125
198
MM Sweep
73
73
22
3
30
36
Fed Funds rate target range (bps)
350-375 375-400
400-425
425-450
450-475
475-500
500-525
CCA(15)
188
208
56
15
149
246
Deposit Beta
20%
20%
Total Client
172
216
117
75
153
215
Cash
20%
Actual
20%
20%
20%
25%
Prior Cycle Average
Note: Totals may not foot due to rounding
LPL Financial Member FINRA/SIPC
21
† Assumes change based on Q1 2023 end of period cash balances. Gross Profit* benefit is measured relative to a Fed Funds target range of 0 to 25 bps.View entire presentation