Mr. Hultgren: SWS Group is a holding company that has three subsidiaries - two brokerage firms, Southwest Securities and SWS Financial, and we'll go into the differences between those a little later, and then we also have our bank, which is called Southwest Securities, FSB. The way the firm fits together is that we have a lot of synergies between the brokerage firms and the bank when we sweep our cash balances over to the bank from the retail accounts of the brokerage firms. We also have a lot of institutional businesses on the brokerage side that help us to capture the value in our core operating platform. We have our own operating system, which means that we have a fixed cost and we can therefore get some economies of scale as we continue to grow, which is different than many of the other brokerage firms that are out there. So we're a brokerage and a bank.
TWST: Obviously the economic downturn, the real estate market and the interest rate environment have all put strains on your business, and you're not alone in that. What signs of life do you see for improvements in the near to midterm? What strategic changes are you making to either cut your losses or take advantage of emerging opportunities?
Mr. Hultgren: You're absolutely right about the interest rates. Interest rates at zero are very problematic for us. It causes us some strain in a variety of businesses. And as a matter of fact, we think if we could just get a one-point rise in interest rates, we would probably see about a 13 million increase in our pre-tax earnings. So we're continuing to do what we can to try to grow in this marketplace. We're adding brokers, we're adding bankers and, as a matter of fact, year-over-year in our retail system, we've seen our assets increase by about 30%. What we'd like to see happen is for us to be able to continue to grow so that when the market does turn around, we get quite a big benefit from that. That's where we are right now. As far as your question about what kind of green shoots we're seeing, there does appear to be some turnaround in the economy. We're seeing some improvement in home sales. I think the big thing is unemployment, and we're just not seeing a break in unemployment. Until we see that, I don't think people are going to feel very good about this economy.
Tickers included in this excerpt: SWS
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