Investor Presentaiton
4
Resilient business model with natural hedges to market volatility
ICA balances declined, driven by record net buying
ICA Balances, including Money Market Overflow ($B)
Money Market Overflow Balances
■Overflow ICA Balances
■ Variable ICA Balances
■Fixed Rate ICA Balances
Fixed Rate ICA Balance %
-35%
-55%
~50%
~45%
-35%
-25%
Overflow balances provide capacity when balances spike
•
Historically, when ICA balances exceeded our fixed and variable contract capacity, we
utilized money market overflow contracts
Given improved bank deposit demand and the launch of CCA, we no longer have any
money market overflow balances
Variable balances are primarily indexed to Fed Funds
·
$39.7
$46.8
$43.8
$37.3
$13.9
$2.1
$26.2
$17.7
$1.7
$24.8
$24.4
$0.9
$22.7
$17.6
$12.1
$14.9
Our variable ICA balances declined in the quarter, driven by record net buying of $37B
•
Most variable balances are indexed to Fed Funds + a spread (~10 to ~15 bps)
In the current environment, new variable contracts are averaging Fed Funds plus 15 to 25
bps
Fixed rate ICA contracts are laddered over ~6 years
•
New contracts: In Q1, we added ~$3B of fixed rate balances maturing in 2026-2028,
with a ~430 bps yield consistent with the 3-5 year point on the curve when contracted
Maturing Contracts ($B)
୮
New contracts added in Q1 2023
as of end of Q1 2023
$20.7
$22.0
$12.3
$12.4
$9.0
$10.6
2018
2019
2020
2021
2022
Q1'23
Maturing
Maturing in Q4
$3.4
$2.8
$6.5
$0.4
$5.4
$1.4
$2.5
$3.0
-$0.7
$2.3
$0.8
2023
2024
2025
2026
2027
2028
-330
-250
-330
-330
~420
~420
22
Yield (bps)
† Weighted average yield across ladder is ~320 bps
Note: Yields shown on this page are prior to client deposit rates (~63 bps) and administrator fees (~4 bps). Money market sweep balances are not subject to these costs.
LPL Financial Member FINRA/SIPCView entire presentation