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Item 8. Financial Statements and Supplementary Data

2026-02-23 compared with 2025-02-20 · 416 added, 270 removed, 1374 unchanged (33% of the section changed)

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of

LPL Financial Holdings Inc.

San Diego, California

To the stockholders and the Board of Directors of LPL Financial Holdings Inc.

Opinion on the Financial Statements

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The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Acquisition of Atria Wealth Solutions, Inc.

– Accounting for the provisional valuation of acquired definite-lived intangible assets— Refer to Note 4 to the financial statements

Acquisition of Commonwealth Financial Network – Accounting for the provisional valuation of the acquired definite-lived advisor relationships intangible asset — Refer to Note 4 to the financial statements

Critical Audit Matter Description

On October 1, 2024, the Company acquired 100% of the outstanding common shares of Atria Wealth Solutions, Inc., a wealth management solutions holding company.

Total consideration for the transaction was $888.4 million, which included an initial cash payment of $858.9 million and a liability of $29.5 million for contingent consideration, which represents the acquisition date fair value of the additional cash consideration that may be transferred to the sellers if certain asset conversion or retention and other milestones, including conversion of off-platform assets to the Company's platform, are achieved in the year following the closing.

On August 1, 2025, the Company acquired 100% of the outstanding equity interests of Commonwealth Financial Network, a privately-held independent wealth management firm.

Total consideration for the transaction was $2,017.8 million, which included a cash payment of $1,927.4 million and other liabilities incurred to the seller of $90.4 million at closing.

The Company accounted for the acquisition under the acquisition method of accounting for business combinations.

The purchase price is provisionally allocated across the estimated fair value of the definite-lived intangible and tangible assets acquired and liabilities assumed, with the excess purchase price allocated to goodwill.

The Company used the income approach to estimate the fair value of the intangible assets, which provisionally comprised of $201.7 million of institutional relationships and $438.2 million of advisor relationships.

The fair value of the intangible assets required management to make significant estimates and assumptions related to future net cash flows and discount rates.

Given the fair value determination of intangible assets requires management to make significant estimates and assumptions related to the forecasted net cash flows, as well as the selection of the discount rates, performing audit procedures to evaluate the reasonableness of these estimates and assumptions required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

The Company used the income approach to estimate the $1,690.0 million provisional fair value of the advisor relationships intangible asset.

The fair value determination of the advisor relationships intangible asset required management to make significant estimates and assumptions related to future net cash flows and the discount rate.

Given the fair value determination of the advisor relationships intangible asset requires management to make significant estimates and assumptions related to forecasted net cash flows, as well as the selection of the discount rate, performing audit procedures to evaluate the reasonableness of these estimates and assumptions required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the valuation of intangible assets included the following, among others:

Our audit procedures related to the valuation of the advisor relationships intangible asset included the following, among others:

• We obtained an understanding, evaluated the design, and tested operating effectiveness of internal controls.

For example, we tested controls over management’s valuation of intangible assets, including the review of forecasts of future net cash flows and the selection of the discount rate.

• We evaluated management’s policies and methodology for establishing the fair value of intangible assets used in the purchase price allocation, which was provisionally allocated as of December 31, 2024.

For example, we tested controls over management’s valuation of the advisor relationships intangible asset, including the review of forecasts of future net cash flows and the selection of the discount rate.

• We evaluated management’s policies and methodology for establishing the fair value of the advisor relationships intangible asset used in the purchase price allocation, which was provisionally allocated as of December 31, 2025.

• We assessed the knowledge, skill, ability, and objectivity of management’s valuation specialist and evaluated the work performed.

• We evaluated the reasonableness of business assumptions related to future net cash flows for the intangible assets, considering the past performance of the acquired company, the Company’s strategic plan going forward, previous acquisitions by the Company, and evidence obtained in other areas of the audit, and obtained audit support to substantiate the material assumptions therein.

• We evaluated the reasonableness of business assumptions related to future net cash flows for the advisor relationships intangible asset, considering the past performance of the acquired company, the Company’s strategic plan going forward, previous acquisitions by the Company, and evidence obtained in other areas of the audit, and obtained audit support to substantiate the material assumptions therein.

• We tested the completeness and accuracy of the underlying data supporting the forecasts of future net cash flows.

• With the assistance of our fair value specialists, we tested:

– the reasonableness of the income approach valuation methodology by challenging key valuation assumptions related to future net cash flows and discount rates and comparing them to industry benchmarks and data and testing the mathematical accuracy of the valuation of intangible assets by performing a recalculation.

– the reasonableness of the discount rates by developing a range of independent estimates and comparing those to the discount rates selected by management.

• We performed sensitivity analyses of business assumptions related to future net cash flows to evaluate the changes in the fair value of the intangible assets that would result.

– the reasonableness of the income approach valuation methodology by challenging key valuation assumptions related to future net cash flows and the discount rate and comparing them to industry benchmarks and data and testing the mathematical accuracy of the valuation of the advisor relationships intangible asset by performing a recalculation.

– the reasonableness of the discount rate by developing a range of independent estimates and comparing those to the discount rate selected by management.

• We performed sensitivity analyses of business assumptions related to future net cash flows to evaluate resulting changes in the fair value of the advisor relationships intangible asset.

Valuation of contingent consideration as of December 31, 2025 — Refer to Notes 2 and 5 to the financial statements

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This contingent consideration is remeasured at its fair value at each subsequent reporting date until the contingency is resolved.

Any changes in fair value are recognized in other expense in the consolidated statements of operations.

The Company determines the fair value for its contingent consideration obligations using probability weighted and Monte-Carlo simulation.

Contingent payments are estimated by applying significant unobservable inputs, including

forecasted growth rates applied to projected future revenue or asset growth, conversion or retention rates, and discount rates which are based on the cost of debt and equity.

Any changes in fair value are recognized in other expense in the consolidated statements of income.

The Company determines the fair value for its contingent consideration obligations using probability-weighted expected return and Monte-Carlo simulation models.

Contingent payments are estimated by applying significant unobservable inputs, including forecasted growth rates applied to projected future revenue or asset growth,

conversion or retention rates, and discount rates which are based on the cost of debt and equity.

These projections are measured against the performance targets specified in each respective acquisition agreement, which may include growth in assets under management, net new assets, asset conversion or retention, or revenue growth.

Significant increases or decreases in the Company’s forecasted growth rates over the measurement period or discount rates would result in a higher or lower fair value measurement.

The balance of contingent consideration recorded in other liabilities as of December 31, 2024, was $196.9 million.

The balance of contingent consideration recorded in other liabilities as of December 31, 2025 and December 31, 2024 was $124.0 million and $196.9 million, respectively.

Given the fair value determination of contingent consideration requires management to make significant estimates and assumptions related to asset growth, conversion or retention rates and the selection of the discount rates, performing audit procedures to evaluate the reasonableness of these estimates and assumptions required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

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• With the assistance of our fair value specialists, we tested:

– the reasonableness of the Monte-Carlo simulation model and Probability Weighted Expected Return Method by independently running Monte-Carlo Simulations and Probability Weighted Expected Return Method models to calculate independent estimates of the fair value of contingent consideration.

– the reasonableness of the Monte-Carlo simulation and probability-weighted expected return models by independently running comparable models to calculate independent estimates of the fair value of contingent consideration.

We compared the results of our estimates of fair value of the contingent consideration to the Company’s fair value estimates.

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Promotional 737,197 589,339 459,233

Depreciation and amortization 308,527 246,994 199,817

Occupancy and equipment 577,224 281,210 248,620

Interest expense on borrowings 403,406 274,181 186,804

Depreciation and amortization 393,434 308,527 246,994

Amortization of other intangibles 236,578 135,234 107,211

Brokerage, clearing and exchange 127,941 105,984 86,063

Professional services 218,738 93,729 72,583

Brokerage, clearing and exchange 178,133 127,941 105,984

Communications and data processing 85,846 75,838 75,717

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Share-based compensation — — 79,362 — — — 79,362

Equity Issuance

5,391 5 1,677,216 — — — 1,677,221

BALANCE — December 31, 2025 136,638 $ 136 $ 3,843,017 56,577 $ ( 4,333,725 ) $ 5,835,057 $ 5,344,485

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Net income $ 863,024 $ 1,058,616 $ 1,066,250

Adjustments to reconcile net income to net cash provided by operating activities:

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Depreciation and amortization 393,434 308,527 246,994

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Provision for credit losses 16,977 18,970 15,947

Deferred (benefit) provision for income taxes ( 76,244 ) ( 68,454 ) ( 93,349 )

Deferred provision (benefit) for income taxes

52,935 ( 76,244 ) ( 68,454 )

Loan forgiveness 430,787 292,446 223,517

Unrealized loss (gain) on deferred compensation plans

Unrealized loss on deferred compensation plans

72,761 66,456 1,164

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Operating lease assets ( 3,019 ) ( 1,942 ) ( 3,112 )

Net cash provided by operating activities 277,589 512,611 1,945,577

Net cash (used in) provided by operating activities

( 411,404 ) 277,589 512,611

CASH FLOWS FROM INVESTING ACTIVITIES:

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Purchases of other investments ( 29,070 ) — ( 4,200 )

Proceeds from sale of other investments

Capitalized interest

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Payment of debt issuance costs ( 31,236 ) ( 17,905 ) ( 13,474 )

Payment of equity issuance costs

( 47,779 ) — —

Payment of contingent consideration ( 47,395 ) ( 50,063 ) —

Tax payments related to settlement of restricted stock units ( 33,484 ) ( 41,288 ) ( 40,005 )

Proceeds from issuance of common stock 1,725,000 — —

Repurchase of common stock ( 100,004 ) ( 170,096 ) ( 1,100,101 )

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Proceeds from stock option exercises and other 22,175 28,728 18,665

Principal payment of financing obligation ( 902 ) — —

Principal payment of finance leases and obligations ( 209 ) ( 342 ) ( 195 )

Net cash provided by (used in) financing activities 3,168,685 1,417,432 ( 208,532 )

1,417,432 ( 208,532 ) ( 504,271 )

NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS, CASH AND EQUIVALENTS SEGREGATED UNDER FEDERAL OR OTHER REGULATIONS AND RESTRICTED CASH 370,688 102,889 ( 556,107 )

102,889 ( 556,107 ) 1,064,906

CASH AND EQUIVALENTS, CASH AND EQUIVALENTS SEGREGATED UNDER FEDERAL OR OTHER REGULATIONS AND RESTRICTED CASH — Beginning of year 2,684,052 2,581,163 3,137,270

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Lease assets obtained in exchange for operating lease liabilities $ 57,734 $ 37,115 $ 17,517

Contingent consideration liabilities recognized at acquisition date

Prefunded acquisition

$ 70,202 $ — $ —

Contingent consideration and other liabilities recognized at acquisition date

$ 86,821 $ 87,883 $ 88,132

2025 2024 2023

Cash and equivalents $ 1,037,378 $ 967,079 $ 465,671

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Boston, Massachusetts;

and Austin, Texas, is a clearing broker-dealer and an investment advisor that principally transacts business for its advisors and institutions on behalf of their clients in a broad array of financial products and services.

Austin, Texas;

and New York, New York, is a clearing broker-dealer and an investment adviser that principally transacts business for its advisors and institutions on behalf of their clients in a broad array of financial products and services.

LPL Financial is licensed to operate in all 50 states, Washington D.C., Puerto Rico and the U.S.

Virgin Islands.

• LPL Enterprise, LLC (“LPL Enterprise”) is a limited product shelf introducing broker-dealer and registered investment advisor that supports a portion of the Company’s institutional business, providing brokerage and investment advisory services to the clients of those institutional businesses.

• LPL Enterprise, LLC (“LPL Enterprise”) is a limited product shelf introducing broker-dealer and registered investment adviser that supports a portion of the Company’s institutional services’ clients, providing brokerage and investment advisory services to the clients of those institutional businesses.

• LPL Insurance Associates, Inc.

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• Atria Wealth Solutions, Inc.

(“Atria”) is a holding company for the registered broker-dealers and investment advisors that the Company acquired in connection with the acquisition of Atria.

Atria has seven introducing broker-dealer subsidiaries, which clear transactions through third-party clearing and carrying firms.

The Company expects to complete the conversion of assets from these acquired broker-dealers and investment advisors in 2025 and withdraw the related registrations of these entities thereafter.

(“Atria”) is a holding company for the previously registered broker-dealers and investment advisers that the Company acquired in connection with the acquisition of Atria.

Atria had seven introducing broker-dealer subsidiaries, which cleared transactions through third-party clearing and carrying firms.

The Company completed the conversion of assets from these acquired broker-dealers and investment advisers to the Company’s platform and completed the withdrawal of the related registrations of these entities during the fourth quarter of 2025.

• AW Subsidiary, Inc.

is a holding company for AdvisoryWorld and Blaze Portfolio Systems LLC (“Blaze”).

AdvisoryWorld offers technology products, including proposal generation, investment analytics and portfolio modeling, to both the Company’s advisors and external clients in the wealth management industry.

Blaze provides an advisor-facing trading and portfolio rebalancing platform.

is a holding company for Blaze Portfolio Systems LLC (“Blaze”), which provides an advisor-facing trading and portfolio rebalancing platform.

• PTC Holdings, Inc.

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PTC also provides Individual Retirement Account (“IRA”) custodial services for LPL Financial.

• LPL Employee Services, LLC and its subsidiary, Allen & Company of Florida, LLC, along with their affiliate Financial Resources Group Investment Services, LLC, provide primary support for the Company’s employee advisor affiliation model.

• LPL Employee Services, LLC and its subsidiary, Allen & Company of Florida, LLC, provide primary support for the Company’s employee advisor affiliation model.

• CFN Holding Company, LLC (“CFN”) is a holding company for Commonwealth Equity Services, LLC (“CES”), which is a registered broker-dealer and investment adviser that does business as Commonwealth Financial Network (“Commonwealth”).

CES is an introducing broker-dealer that clears transactions through a third-party clearing and carrying firm.

The Company expects to complete the conversion of assets from CES in the fourth quarter of 2026 and withdraw the related registrations of that entity thereafter.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), which require the Company to make estimates and assumptions regarding the valuation of certain financial instruments, acquisitions, contingent consideration, goodwill and other intangibles, allowance for credit losses on receivables, share-based compensation, accruals for liabilities, income taxes, revenue and expense accruals and other matters that affect the consolidated financial statements and related disclosures.

Actual results could differ from those estimates under different assumptions or conditions and the differences may be material to the consolidated financial statements.

LPL FINANCIAL HOLDINGS INC.

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Notes to Consolidated Financial Statements

allowance for credit losses on receivables, share-based compensation, accruals for liabilities, income taxes, revenue and expense accruals and other matters that affect the consolidated financial statements and related disclosures.

Actual results could differ from those estimates under different assumptions or conditions and the differences may be material to the consolidated financial statements.

Consolidation

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Share-based compensation is recognized over the requisite service period of the individual awards, which generally equals the vesting period.

The Company recognizes share-based compensation for equity awards granted to advisors and institutions as advisory and commission expense on the consolidated statements of income.

The fair value of restricted stock units is equal to the closing price of the Company’s stock on the date of grant.

Share-based compensation is recognized over the requisite service period of the individual awards, which generally equals the vesting period.

LPL FINANCIAL HOLDINGS INC.

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Notes to Consolidated Financial Statements

The Company recognizes share-based compensation for equity awards granted to advisors and institutions as advisory and commission expense on the consolidated statements of income.

The fair value of restricted stock units is equal to the closing price of the Company’s stock on the date of grant.

Share-based compensation is recognized over the requisite service period of the individual awards, which generally equals the vesting period.

The Company makes assumptions regarding the number of restricted stock awards, restricted stock units, deferred stock units and performance stock units that will be forfeited.

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Discounts are accreted using a method that approximates the effective yield method over the term of the bill and are recorded to interest income, net as an adjustment to the investment yield.

Restricted Cash

Restricted cash primarily represents cash held and for use by the captive insurance subsidiary and is primarily composed of U.S.

government obligations and money market funds.

LPL FINANCIAL HOLDINGS INC.

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Notes to Consolidated Financial Statements

Restricted Cash

Restricted cash primarily represents cash held and for use by the captive insurance subsidiary, which is primarily composed of U.S.

government obligations, money market funds, and cash held in escrow as a result of the Company’s acquisition of Commonwealth.

See Note 4 - Acquisitions for additional information.

Receivables from Clients, Net and Client Payables

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Ending balance — December 31 $ 17,161 $ 17,901 $ 12,977

LPL FINANCIAL HOLDINGS INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Other Receivables, Net

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Management monitors the adequacy of these estimates through periodic evaluations against actual trends experienced.

LPL FINANCIAL HOLDINGS INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The following table reflects a roll-forward of the allowance for credit losses on other receivables (in thousands):

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Provision for credit losses 8,637 8,362 6,500

Charge-offs, net of recoveries ( 8,015 ) ( 7,840 ) ( 8,688 )

(Charge-offs) recoveries, net

( 7,585 ) ( 8,015 ) ( 7,840 )

Other — 550 —

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The Company generally classifies its investments in debt and equity instruments as trading securities, except for U.S.

government notes held by its wholly owned subsidiary PTC, which are held to satisfy minimum capital requirements of the OCC and classified as held-to-maturity securities because the Company has both the intent and the ability to hold these investments to maturity.

government notes held by its wholly owned subsidiary PTC, which are held to satisfy minimum capital requirements of the Office of the Comptroller of the Currency (“OCC”) and classified as held-to-maturity securities because the Company has both the intent and the ability to hold these investments to maturity.

The Company has not classified any investments as available-for-sale.

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The Company does not capitalize pilot projects or projects for which it believes that the future economic benefits are less than probable.

Leasehold improvements are amortized over the lesser of their useful lives or the terms of the underlying leases.

Leasehold improvements are amortized over the lesser of their useful lives or the terms of the underlying

LPL FINANCIAL HOLDINGS INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Computers and software are depreciated over a period of 3 to 5 years.

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No impairment occurred for the years ended December 31, 2025, 2024 or 2023.

LPL FINANCIAL HOLDINGS INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Accounting for business combinations requires the Company to make significant estimates and assumptions with respect to intangible assets, liabilities assumed, pre-acquisition contingencies, useful lives and liabilities for contingent consideration, as applicable.

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This contingent consideration is remeasured at its fair value at each subsequent reporting date until the contingency is resolved.

Any changes in fair value are recognized in other expense in the consolidated statements of operations.

Any changes in fair value are recognized in other expense in the consolidated statements of income.

Goodwill and Other Intangibles, Net

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Intangibles that are deemed to have definite lives are amortized over their useful lives generally ranging from 5 to 18 years.

They are reviewed for impairment when there is evidence that events or changes in circumstances indicate that the carrying amount may not be recoverable.

They are reviewed for impairment when there is evidence that events or changes in circumstances

LPL FINANCIAL HOLDINGS INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

indicate that the carrying amount may not be recoverable.

Recoverability of assets to be held and used is measured by comparing the carrying amount to the estimated undiscounted future cash flows expected to be generated.

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See Note 9 - Goodwill and Other Intangibles, Net , for additional information.

LPL FINANCIAL HOLDINGS INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Securities Borrowed

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When no amount within the range is a better estimate than any other amount, the Company accrues the minimum amount in the range.

The Company has established an accrual for those legal proceedings and regulatory matters for which a loss is both probable and the amount can be reasonably estimated.

The Company also accrues for losses at its captive insurance subsidiary for those matters covered by self-insurance.

The captive insurance subsidiary records losses and loss reserve liabilities based on actuarially determined estimates of losses incurred, but not yet reported to the Company as well as specific reserves for proceedings and matters that are probable and estimable.

The captive insurance subsidiary is funded by payments from LPL Financial and has cash reserves to cover losses, including $ 100.5 million in restricted cash.

Assessing the

LPL FINANCIAL HOLDINGS INC.

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Notes to Consolidated Financial Statements

probability of a loss occurring and the timing and amount of any loss related to a legal proceeding or regulatory matter is inherently difficult and requires management to make significant judgments.

Company has established an accrual for those legal proceedings and regulatory matters for which a loss is both probable and the amount can be reasonably estimated.

The Company also accrues for losses at its captive insurance subsidiary for those matters covered by self-insurance.

The captive insurance subsidiary is funded by payments from LPL Financial and has cash reserves to cover losses, including $ 127.8 million in restricted cash.

Assessing the probability of a loss occurring and the timing and amount of any loss related to a legal proceeding or regulatory matter is inherently difficult and requires management to make significant judgments.

For additional information, see Note 14 - Commitments and Contingencies - “Legal and Regulatory Matters.”

Recently Issued Accounting Pronouncements

In November 2024, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) :

In September 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-06 Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software to modernize the accounting for and disclosure of software costs.

The ASU may be applied prospectively, retrospectively or via a modified transition approach and is effective for annual periods beginning after December 15, 2027, with early adoption permitted.

We are currently assessing the amendment’s impact on our consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) :

Disaggregation of Income Statement Expenses , which requires public business entities to disclose, in interim and annual reporting periods, additional information about certain expenses in the notes to financial statements.

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however, it does not expect this update to have an impact on its financial condition or results of operations.

Recently Adopted Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures to enhance the transparency of income tax disclosures relating to the rate reconciliation, disclosure of income taxes paid, and certain other disclosures.

The ASU should be applied prospectively and is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact on the related disclosures;

however, it does not expect this update to have an impact on its financial condition or results of operations.

Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures to improve the disclosures about reportable segments and include more detailed information about a reportable segment’s expenses.

This ASU also requires that a public entity with a single reportable segment, like the Company, provide all of the disclosures required as part of the amendments and all existing disclosures required by Topic 280.

The ASU should be applied retrospectively to all prior periods presented in the financial statements and is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

The ASU was applied prospectively and is effective for annual periods beginning after December 15, 2024.

The adoption did not have an impact on the Company’s financial condition or results of operations.

See Note 20 - Segment Information for related disclosures .

See Note 13 - Income Taxes for related disclosures .

NOTE 3 - REVENUE

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The majority of our client accounts are on a calendar quarter and are billed using values as of the last business day of the preceding quarter.

The value of the eligible assets in an advisory account on the billing date is adjusted for contributions and withdrawals during the period to determine the amount of revenue earned in the period.

Advisory revenue collected on the Company’s corporate advisory platform is proposed by the advisor and agreed to by the client and was approximately 1 % of the underlying assets for the year ended December 31, 2024.

The value of the eligible assets in an advisory account on the billing date is

LPL FINANCIAL HOLDINGS INC.

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Notes to Consolidated Financial Statements

adjusted for contributions and withdrawals during the period to determine the amount of revenue earned in the period.

The Company also supports independent RIA firms that conduct their business through separate registered investment advisor firms (“Independent RIAs”) through its Independent RIA advisory platform, which allows advisors to engage the Company for technology, clearing and custody services, as well as access the capabilities of the Company’s investment platforms.

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220,251 181,695 145,642

Total trailing revenue

202,984 152,500 110,698

332,849 142,354 102,506

Total sales-based revenue

$ 2,645,913 $ 1,763,232 $ 1,252,783

2 unchanged sentences

46,526 44,466 35,610

Total sales-based revenue

Total trailing revenue

$ 1,859,159 $ 1,542,255 $ 1,299,840

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(1) Service and fee revenue recognized over time includes revenue such as IRA custodian fees, error and omission insurance fees and technology fees.

(2) Service and fee revenue recognized at a point-in-time includes revenue such as account fees, IRA termination fees and conference fees.

(2) Service and fee revenue recognized at a point-in-time includes revenue such as account fees, IRA termination fees and registration fees.

LPL FINANCIAL HOLDINGS INC.

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For conference revenue, the Company recognizes revenue as the conferences are held.

LPL FINANCIAL HOLDINGS INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

NOTE 4 - ACQUISITIONS

Acquisition of Atria Wealth Solutions, Inc.

On October 1, 2024 ("acquisition date"), the Company acquired 100 % of the outstanding common shares of Atria Wealth Solutions, Inc.

("Atria"), a wealth management solutions holding company headquartered in New York, in order to expand its addressable markets and complement organic growth.

As part of the acquisition, the Company acquired Atria's seven introducing broker-dealer subsidiaries and expects to transition the related brokerage and advisory assets to the Company's platform in 2025.

The Company accounted for the acquisition under the acquisition method of accounting for business combinations.

The following table summarizes the total consideration for the transaction at the acquisition date (dollars in thousands):

Total Consideration October 1, 2024

During the year ended December 31, 2025, the Company completed 34 acquisitions, six of which have been accounted for as business combinations and 28 of which have been accounted for as asset acquisitions.

Business Combinations

Acquisition of Commonwealth Financial Network

On August 1, 2025, the Company acquired 100 % of the outstanding equity interests of CFN, a privately-held independent wealth management firm headquartered in Massachusetts, in order to leverage its scale and enhance its capabilities.

As part of the transaction, Commonwealth’s advisory and brokerage assets are expected to transition to the Company’s platform in the fourth quarter of 2026.

Commonwealth's results were included in the Company's consolidated statements of income from August 1, 2025 through December 31, 2025 and consolidated statements of financial condition as of December 31, 2025.

The Company accounted for the transaction under the acquisition method of accounting for business combinations.

The following table summarizes the cash funded at closing and total consideration transferred (dollars in thousands):

Cash Funded at Close August 1, 2025

Cash consideration $ 1,927,371

Cash for liabilities assumed (1)

Cash for post-combination expenses (2)

Total cash funded at close $ 2,752,243

Consideration August 1, 2025

Cash $ 1,927,371

Fair value of contingent consideration 29,511

Other liabilities incurred 90,414

Total consideration $ 2,017,785

____________________

(1) Liabilities assumed are reflected in the Accounts payable and accrued liabilities and Equity awards liability line items in the table below and were paid concurrently with the closing.

(2) The post-combination expenses were paid at the closing and primarily included $ 228.4 million of costs related to transaction bonuses and the acceleration of unvested equity awards which were classified as Compensation and benefits and $ 190.1 million of costs related to certain contract termination fees which were classified as Occupancy and equipment in the consolidated financial statements.

LPL FINANCIAL HOLDINGS INC.

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Notes to Consolidated Financial Statements

The following table summarizes the Company's provisional purchase price allocation at August 1, 2025 (dollars in thousands):

Provisional Purchase Price Allocation (1)

August 1, 2025

Fair value of consideration transferred $ 2,017,785

Cash and equivalents 333,927

Restricted cash 95,414

Investment securities 43,719

Receivables from brokers, dealers and clearing organizations 1,839

Other receivables, net 55,788

Advisor loans, net 92,716

Property and equipment, net 7,769

Intangible assets 1,716,000

Other assets 58,330

Total identifiable assets acquired $ 2,405,502

Accrued advisory and commission expenses payable 14,440

Accounts payable and accrued liabilities 57,012

Client payables 525

Equity awards liability 382,231

Unearned revenue 309,594

Other liabilities 47,218

Total liabilities assumed $ 811,020

Net assets acquired 1,594,482

Goodwill $ 423,303

____________________

(1) The Company recorded provisional purchase accounting adjustments during the three months ended December 31, 2025 which resulted in a $ 12.9 million decrease in advisor loans, net, a $ 40.0 million increase in advisor relationship intangibles, a $ 5.0 million increase in trade name intangible, a $ 1.9 million decrease in other assets and a $ 30.1 million decrease in goodwill .

The goodwill primarily includes synergies expected to result from combining operations and is deductible for tax purposes.

Other intangible assets comprised $ 1.69 billion of advisor relationships, which were assigned useful lives of 14 years, and $ 26.0 million of trade name intangible, which was assigned a useful life of 16 years.

See Note 9 - Goodwill and Other Intangibles, Net, for additional information.

The fair value determination of certain assets acquired and liabilities assumed required the Company to make significant estimates and assumptions.

Intangible assets were valued using an income approach with estimates and assumptions related to future net cash flows, discount and royalty rates.

Advisor loans were valued using an income approach with assumptions related to net cash flows and conversion rates.

The fair value of repayable loans was $ 88.0 million and approximates its carrying value.

Given the recent date of closing, the purchase accounting analysis is ongoing and may result in changes to the value of assets acquired and liabilities recorded, including other intangible assets.

The Company’s consolidated statements of income for the year ended December 31, 2025 include total revenues attributable to Commonwealth of $ 1.18 billion and a net loss of $ 201.3 million attributable to Commonwealth that was driven primarily by the acquisition related costs that were recognized at the closing.

LPL FINANCIAL HOLDINGS INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Acquisition related costs incurred as part of the Commonwealth acquisition during the year ended December 31, 2025 were $ 486.5 million.

These costs include post-combination expense of $ 419.0 million, which primarily comprised amounts related to transaction bonuses and equity award acceleration, and amounts related to certain contract termination fees, which were classified as Compensation and benefits expense and Occupancy and equipment expense, respectively, in the Company's consolidated statements of income, and $ 67.5 million of costs primarily related to professional service costs, which were classified as Professional services expense in the Company’s consolidated statements of income.

The following table presents unaudited pro forma results as if the acquisition of Commonwealth had occurred on January 1, 2024 (dollars in thousands):

Years Ended December 31,

LPL Financial and Commonwealth Pro Forma Combined Financial Information (unaudited) 2025 2024

Total revenue $ 18,634,628 $ 15,073,569

Net income $ 1,330,159 $ 536,737

The unaudited pro forma results above were prepared by combining the historical financial information of the Company and Commonwealth and making certain adjustments.

Pro forma adjustments include the impact of amortization of intangible assets recognized as part of the acquisition, amortization of transition assistance loans made to advisors that will transition to the Company’s platform in 2026, and the impact of related interest and issuance costs of financing the transaction.

Pro forma results for the year ended December 31, 2024 also include the impact of $ 486.5 million of transaction costs incurred during the year ended December 31, 2025 as a result of the acquisition.

The unaudited pro forma information does not reflect the potential benefits of cost and funding synergies, opportunities to earn additional revenues or other factors, and, therefore, does not represent the actual results that would have occurred had the companies actually been combined as of January 1, 2024.

The Company financed this transaction through a combination of corporate cash, proceeds from the debt and equity issuances completed in April 2025, and borrowings under LPL Holdings, Inc.’s revolving credit facility.

See Note 11 - Corporate Debt and Other Borrowings, Net, and Note 15 - Stockholders’ Equity for additional information.

Acquisition of The Investment Center, Inc.

(“The Investment Center”)

On March 4, 2025, the Company acquired The Investment Center for total consideration of $ 72.6 million, which included $ 72.2 million of cash and liabilities of $ 0.4 million for contingent consideration.

The Company was introduced to The Investment Center as part of the Atria acquisition, and the cash consideration was prefunded in 2024 in conjunction with the close of the Atria acquisition.

The Company subsequently transitioned The Investment Center’s brokerage and advisory assets to the Company’s platform.

The transaction also includes potential contingent consideration of up to $ 10.4 million based on revenue growth in the years following the acquisition.

The Company accounted for the acquisition under the acquisition method of accounting for business combinations.

Acquisition related costs incurred during the year ended December 31, 2025 were $ 6.0 million, primarily related to costs which were classified as compensation and benefits expenses and promotional expenses in the Company's consolidated statements of income.

The Company recorded purchase accounting adjustments during the year ended December 31, 2025 which resulted in a $ 2.0 million increase in cash consideration, a $ 6.1 million decrease in other liabilities, a $ 0.4 million decrease in advisor relationships, and a $ 3.7 million decrease in goodwill.

As of December 31, 2025, the Company had allocated $ 43.5 million and $ 29.1 million of the consideration to advisor relationships and goodwill, respectively.

The advisor relationships were assigned a useful life of 16 years.

See Note 9 - Goodwill and Other Intangibles, Net, for additional information.

Other Business Combinations

The Company accounted for four other transactions under the acquisition method of accounting for business combinations.

Total consideration for these transactions was $ 75.2 million, which included $ 58.3 million of cash, and liabilities of $ 15.2 million for contingent consideration, which represents the acquisition date fair value of the additional cash consideration that may be transferred to the sellers if certain asset or revenue growth metrics are achieved in the years following the closing.

This contingent consideration may be settled for amounts up to $ 46.9 million in the years following the closing.

The Company allocated $ 63.3 million of the consideration to client relationships and $ 0.3 million to advisor relationships, which were assigned useful lives of 14 years to 15 years, and $ 11.6 million to goodwill.

LPL FINANCIAL HOLDINGS INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Asset Acquisitions

The Company accounted for 28 other transactions as asset acquisitions.

These transactions included total initial consideration of $ 227.9 million, including $ 222.4 million which was allocated to client relationships and $ 5.5 million which was allocated to advisor relationships.

These relationships were assigned useful lives of 14 years to 15 years, respectively, and the related transactions include potential contingent payments of up to $ 158.1 million in the years following the closing if certain asset or revenue growth metrics are achieved.

The Company has not recognized a liability for these contingent payments as the amounts to be paid will be uncertain until a future measurement date.

See Note 9 - Goodwill and Other Intangibles, Net , for additional information.

Acquisitions Completed in Prior Periods

During the year ended December 31, 2024, the Company completed 24 acquisitions, eight of which have been accounted for as business combinations and 16 of which were accounted for as asset acquisitions.

Business Combinations

Acquisition of Atria Wealth Solutions, Inc.

On October 1, 2024, the Company acquired 100 % of the outstanding common shares of Atria Wealth Solutions, Inc., a wealth management solutions holding company headquartered in New York, in order to expand its addressable markets and complement organic growth.

As part of the acquisition, the Company acquired Atria's seven introducing broker-dealer subsidiaries and completed the conversion of the related brokerage and advisory assets to the Company’s platform in July 2025.

The Company accounted for the transaction under the acquisition method of accounting for business combinations.

The following table summarizes the total consideration for the transaction at October 1, 2024 (dollars in thousands):

Total Consideration October 1, 2024

Cash $ 853,429

Fair value of contingent consideration 19,545

Total consideration $ 872,974

The contingent consideration, which may be settled for amounts up to $ 330 million, represents the estimated fair value of the additional cash consideration that may be paid to the sellers if certain asset conversion, retention and other milestones are achieved in the year following the closing.

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See Note 5 - Fair Value Measurements, for additional information.

The following table summarizes the Company's provisional purchase price allocation at the acquisition date (dollars in thousands):

Provisional Purchase Price Allocation

LPL FINANCIAL HOLDINGS INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The following table summarizes the Company's purchase price allocation at October 1, 2024 (dollars in thousands):

Purchase Price Allocation (1)

October 1, 2024

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Goodwill $ 307,869

________________

(1) During the year ended December 31, 2025, the Company recorded purchase accounting adjustments that resulted in a $ 15.4 million decrease in total consideration, a $ 13.5 million decrease in advisor relationships, a $ 6.3 million decrease in institutional relationships, a $ 4.8 million decrease in other receivables, a $ 5.2 million increase in other assets, a $ 1.3 million decrease in deferred tax liabilities, and a $ 6.2 million increase in accounts payable and accrued liabilities.

These cumulative adjustments resulted in an $ 8.9 million increase to goodwill .

The goodwill primarily includes synergies expected to result from combining operations.

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The fair value determination of institutional and advisor relationships required the Company to make significant estimates and assumptions related to future net cash flows and discount rates.

Given the recent date of closing, the purchase accounting analysis is ongoing and may result in changes to the value of assets acquired and liabilities recorded, including other intangible assets and liabilities for contingent consideration.

Acquisition related costs incurred as part of the Atria acquisition during the year ended December 31, 2024 were $ 18.0 million and primarily comprised amounts related to professional services, which were classified as professional services expense in the Company's consolidated statements of income.

Acquisition related costs incurred as part of the Atria acquisition during the year ended December 31, 2024 were $ 18.0 million, and primarily related to professional services, which were classified as professional services in the Company's consolidated statements of income.

Atria's results were included in the Company's consolidated statements of income from October 1, 2024 through December 31, 2024.

For this period, total revenues attributable to Atria were approximately $ 194.0 million and net income was not material.

LPL FINANCIAL HOLDINGS INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The following table presents unaudited pro forma results as if the acquisition of Atria had occurred on January 1, 2024 (dollars in thousands):

Years Ended December 31,

Year Ended December 31,

LPL Financial and Atria Pro Forma Combined Financial Information (unaudited) 2024

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The unaudited pro forma results above were prepared by combining the historical financial information of the Company and Atria and making certain adjustments.

Pro forma adjustments include the impact of amortization of intangible assets recognized as part of the acquisition, amortization of transition assistance loans made to advisors and institutions that will convert to the Company's platform in 2025, and the related interest impact of financing the transaction.

Pro forma results for the year ended December 31, 2023 also include the impact of $ 18.0 million of transaction costs incurred during the year ended December 31, 2024 as a result of the acquisition.

Other Acquisitions

During the twelve months ended December 31, 2024, the Company completed 23 other acquisitions, 22 of which were completed under the Liquidity & Succession solution in which the Company buys advisor practices.

Certain of these acquisitions have been accounted for as business combinations and certain have been accounted for as asset acquisitions.

Business Combinations

The assets and liabilities acquired as part of acquisitions that qualify as business combinations are recognized at fair value as of the acquisition date.

This fair value determination requires the Company to make significant estimates and assumptions about market conditions, future expected cash flows, asset or revenue growth, discount rates, and market conditions which are inherently uncertain and subject to refinement.

As a result, during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to assets acquired, liabilities assumed, liabilities for contingent consideration, or goodwill as additional information becomes available.

The Company accounted for seven of these acquisitions under the acquisition method of accounting for business combinations.

Total consideration for these transactions was $ 113.2 million, which included $ 64.4 million of cash, and liabilities of $ 48.8 million for contingent consideration, which represents the acquisition date fair value of the additional cash consideration that may be transferred to the sellers if certain asset growth is achieved in the one to seven years following the closing.

This contingent consideration may be settled for amounts up to $ 190.3 million in the years following the closing.

The Company made purchase accounting adjustments during the twelve months ended December 31, 2024 related to acquisitions that were completed during the year and for which the Company’s purchase accounting analysis was ongoing.

These adjustments resulted in a $ 7.1 million decrease in customer relationships and liabilities for contingent consideration, respectively.

At December 31, 2024, the Company allocated $ 34.3 million of the purchase price to goodwill and $ 78.9 million to client relationships acquired as part of these acquisitions, which includes a provisional allocation of $ 3.8 million to goodwill and $ 11.3 million to client relationships for acquisitions completed in the fourth quarter for which purchase accounting is not yet complete.

The goodwill primarily includes synergies expected to result from combining operations and is deductible for tax purposes.

The client relationships were valued using the income approach and assigned useful lives of 14 years.

See Note 9 – Goodwill and Other Intangibles, Net , for additional information.

Asset Acquisitions

The Company accounted for 16 other acquisitions as asset acquisitions.

These transactions included total initial consideration of $ 178.3 million, including $ 48.5 million which was allocated to advisor relationships and $ 129.8 million which was allocated to client relationships.

These relationships were assigned useful lives of 14 years to 15 years and the related transactions include potential contingent payments of up to $ 97.2 million in the years following the closing if certain asset growth is achieved.

The Company has not recognized a liability for these contingent

Pro forma adjustments include the impact of amortization of intangible assets recognized as part of the acquisition, amortization of transition assistance loans made to advisors

LPL FINANCIAL HOLDINGS INC.

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Notes to Consolidated Financial Statements

payments as the amounts to be paid will be uncertain until a future measurement date.

See Note 9 – Goodwill and Other Intangibles, Net , for additional information.

Acquisitions Completed in Prior Periods

Acquisition of Financial Resources Group Investment Services, LLC

On January 31, 2023, the Company acquired Financial Resources Group Investment Services, LLC, a broker-dealer and independent branch office, in order to expand its addressable markets and complement organic gro wth.

The Company accounted for the acquisition under the acquisition method of accounting for business combinations, and total consideration for the transaction was $ 189.2 million, which included an initial cash payment of $ 143.8 million and a liability of $ 45.4 million for contingent consideration.

The Company allocated $ 129.7 million of the purchase price to goodwill, $ 53.5 million to definite-lived intangible assets, $ 9.0 million to cash acquired and the remainder to other assets acquired and liabilities assumed as part of the acquisition.

The goodwill primarily includes synergies expected to result from combining operations and is deductible for tax purposes.

See Note 9 – Goodwill and Other Intangibles, Net , for additional information.

Other Prior Period Acquisitions

Business Combinations

The Company accounted for five Liquidity & Succession transactions under the acquisition method of accounting for business combinations during the year ended December 31, 2023.

Total consideration for these transactions was $ 190.2 million, which included initial consideration of $ 147.4 million, including $ 140.3 million of cash and a liability of $ 42.7 million for contingent consideration.

At December 31, 2023, the Company allocated $ 84.5 million of the purchase price to goodwill and $ 105.7 million to the definite-lived intangible assets acquired as part of these acquisitions.

and institutions that have converted to the Company's platform in 2025, and the related interest impact of financing the transaction.

Pro forma results for the year ended December 31, 2024 also include the impact of $ 18.0 million of transaction costs incurred during the year ended December 31, 2024 as a result of the acquisition.

Other Business Combinations

The Company accounted for seven other transactions under the acquisition method of accounting for business combinations during the year ended December 31, 2024.

Total consideration for these transactions was $ 113.2 million, which included $ 64.4 million of cash, and liabilities of $ 48.8 million for contingent consideration.

At December 31, 2024, the Company allocated $ 34.3 million of the purchase price to goodwill and $ 78.9 million to client relationships acquired as part of these acquisitions, which included a provisional allocation of $ 3.8 million to goodwill and $ 11.3 million to client relationships for acquisitions completed in the fourth quarter for which purchase accounting was finalized in 2025.

The goodwill primarily includes synergies expected to result from combining operations and is deductible for tax purposes.

The Company recorded purchase accounting adjustments during the twelve months ended December 31, 2024 related to acquisitions which were completed during the fourth quarter of 2023 and for which the Company’s purchase accounting analysis was finalized in 2024.

These adjustments resulted in a $ 39.3 million increase in customer relationships, a $ 9.7 million increase in liabilities for contingent consideration, a $ 12.5 million decrease in technology, and a $ 17.1 million decrease in goodwill.

The intangible assets are composed primarily of client relationships which were assigned useful lives of 15 years.

See Note 9 – Goodwill and Other Intangibles, Net , for additional information.

Asset Acquisitions

The Compan y accounted for 15 other acquisitions as asset acquisitions during the year ended December 31, 2023.

These transactions included initial consideration of $ 180.4 million, including $ 142.3 million of which was allocated to client relationships and $ 38.1 million of which was allocated to advisor relationships.

These transactions include potential contingent payments of up to $ 73.1 million in the three years following the closing if certain asset growth is achieved.

The Company accounted for 16 other transactions as asset acquisitions during the year ended December 31, 2024.

These transactions included total initial consideration of $ 178.3 million, including $ 48.5 million which was allocated to advisor relationships and$ 129.8 million which was allocated to client relationships.

These transactions include potential contingent payments of up to $ 97.2 million in the years following the closing if certain asset growth is achieved.

The Company has not recognized a liability for these contingent payments as the amounts to be paid will be uncertain until a future measurement date.

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or other inputs that are observable or can be corroborated by observable market data.

LPL FINANCIAL HOLDINGS INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

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At December 31, 2025 and 2024, the Company had the following financial assets and liabilities that are measured at fair value on a recurring basis:

Cash Equivalents — The Company’s cash equivalents primarily include money market funds which are short term in nature with readily determinable values derived from active markets.

Cash Equivalents — The Company’s cash equivalents primarily include money market funds and U.S.

government obligations, which are short term in nature with readily determinable values derived from active markets.

LPL FINANCIAL HOLDINGS INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Cash Equivalents Segregated Under Federal or Other Regulations — The Company’s cash equivalents segregated under federal or other regulations include U.S.

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See Note 2 - Summary of Significant Accounting Policies and Note 4 - Acquisitions for additional information.

LPL FINANCIAL HOLDINGS INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Level 3 Recurring Fair Value Measurements

The Company determines the fair value for its contingent consideration obligations using probability weighted, Monte-Carlo simulation, and discounted cash flows models.

The Company determines the fair value for its contingent consideration obligations using probability weighted and Monte-Carlo simulation models.

Contingent payments are estimated by applying significant unobservable inputs, including forecasted growth rates applied to project future revenue or asset growth, conversion or retention rates, and discount rates which are based on the cost of debt and equity.

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Significant increases or decreases in the Company’s forecasted growth rates over the measurement period or discount rates would result in a higher or lower fair value measurement.

LPL FINANCIAL HOLDINGS INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The following tables summarize inputs used in the measurement of contingent consideration (dollars in thousands):

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Discount Rate 10.5 % - 18.0 %

4,000 Contingent Consideration Discounted Cash Flow Model Discount Rate 9.3 % - 9.3 %

Equivalency Rate (1)

4.9 % - 5.8 %

26,555 Contingent Consideration Probability Weighted Expected Return Method

Equivalency Rate (1)

5.7 % - 5.7 %

Conversion Rate

— % - 100.0 %

The following table summarizes the changes in fair value for the Company’s Level 3 liabilities during the periods presented (in thousands):

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$ 196,898 $ 118,844

Additions 97,333 88,132

Additions and purchase accounting adjustments

( 3,593 ) 97,333

Payments ( 93,430 ) ( 61,000 )

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Investment securities - trading:

Mutual funds 13,627 — — 13,627

treasury obligations 40,029 — — 40,029

Money market funds 110 — — 110

Mutual funds 33,559 — — 33,559

Equity securities 2,505 — — 2,505

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Equity securities $ 174 $ — $ — $ 174

Debt securities

Total securities sold, but not yet purchased 174 — — 174

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Equity securities 151 — — 151

Mutual funds 55 — — 55

Debt securities — 18 — 18

Total securities sold, but not yet purchased 151 18 — 169

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Other assets:

Securities borrowed 4,334 — 4,334 — 4,334

Deferred compensation plan (2)

8,742 8,742 — — 8,742

Securities borrowed 4,811 — 4,811 — 4,811

Other investments (3)

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The Company’s investment securities include debt and equity securities that the Company has classified as trading securities, which are carried at fair value, as well as investments in U.S.

government notes, which are held by The Private Trust Company, N.A.

to satisfy minimum capital requirements of the OCC.

These securities are recorded at amortized cost and classified as held-to-maturity as the Company has both the intent and ability to hold these investments to maturity.

government notes, which are held by PTC, to satisfy minimum capital requirements of the OCC.

government notes are recorded at amortized cost and classified as held-to-maturity as the Company has both the intent and ability to hold these investments to maturity.

The following table summarizes investment securities (in thousands):

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Total property and equipment, net $ 2,594,286 $ ( 1,384,259 ) $ 1,210,027

____________________

(1) Work in progress includes $ 102.4 million of internal software in development and related hardware and software at December 31, 2024.

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Goodwill acquired 333,205

Purchase accounting adjustments ( 16,980 )

Balance at December 31, 2024 2,172,873

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12.3 909,868 ( 143,039 ) 766,829

Product sponsor relationships 1.3 234,086 ( 220,880 ) 13,206

15.6 26,000 ( 677 ) 25,323

Technology 3.0 20,930 ( 15,443 ) 5,487

Product sponsor relationships 1.2 234,086 ( 232,362 ) 1,724

Total definite-lived intangible assets, net $ 4,541,590 $ ( 1,250,621 ) $ 3,290,969

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13.4 $ 1,626,281 $ ( 699,385 ) $ 926,896

Product sponsor relationships 2.2 234,086 ( 209,076 ) 25,010

Client relationships

12.7 581,519 ( 86,292 ) 495,227

Product sponsor relationships 1.3 234,086 ( 220,880 ) 13,206

Technology 7.6 20,930 ( 13,090 ) 7,840

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Total other intangibles, net $ 1,482,988

____________________

(1) During the year ended December 31, 2024, t he Company completed various acquisitions.

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Future amortization is estimated as follows (in thousands):

2025 - remainder $ 163,027

2026 $ 260,211

Thereafter 2,025,714

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106,038 85,780

Income tax receivables

53,245 20,026

Debt issuance costs, net 10,824 14,154

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Finance lease liabilities (1)

105,123 105,465

Financing obligation liabilities (1)

Taxes payable 69,348 134,815

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Total other liabilities $ 2,247,515 $ 1,951,739

(1) During the year ended December 31, 2025 , t he Company entered into a financing arrangement that resulted in the derecognition of its finance lease and the recognition of a financing obligation.

See Note 12 - Leases , for additional information .

LPL FINANCIAL HOLDINGS INC.

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$ 1,020,000 SOFR+ 125 bps

6.000 % $ — — % 12/5/2026

Term Loan B (1)

4.984 % $ 1,020,000 SOFR+ 147.5 bps

6.403 % 1,027,200 SOFR+ 185 bps

6.000 % 12/5/2028

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500,000 Fixed Rate

5.700 % — — — % 5/20/2027

5.700 % 500,000 Fixed Rate 5.700 % 5/20/2027

2027 Senior Notes (1)

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2028 Senior Notes (1)

500,000 Fixed Rate 4.900 % — Fixed Rate — % 4/3/2028

2028 Senior Notes (1)

750,000 Fixed Rate

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2030 Senior Notes (1)

500,000 Fixed Rate 6.000 % — — — % 5/20/2034

500,000 Fixed Rate 5.150 % — Fixed Rate — % 6/15/2030

2031 Senior Notes (1)

400,000 Fixed Rate 4.375 % 400,000 Fixed Rate 4.375 % 5/15/2031

2034 Senior Notes (1)

500,000 Fixed Rate 6.000 % 500,000 Fixed Rate 6.000 % 5/20/2034

2035 Senior Notes (1)

500,000 Fixed Rate 5.650 % — Fixed Rate — % 3/15/2035

2035 Senior Notes (1)

500,000 Fixed Rate 5.750 % — Fixed Rate — % 6/15/2035

Total Corporate Debt 7,220,000 4,470,000

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Total $ 7,299,000

LPL FINANCIAL HOLDINGS INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The following table presents amounts outstanding and available under the Company’s external lines of credit at December 31, 2025 (in millions):

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Secured, uncommitted lines of credit LPL Financial LLC None $ — unspecified

Refinanced Existing Term Loan B Facility with Term Loan A Facility and Subsequent Extension

On December 5, 2024, LPLH refinanced its existing $ 1.0 billion Term Loan B facility (the “Term Loan B”) with a new $ 1.0 billion Term Loan A facility (the “Term Loan A”).

On November 21, 2025, LPLH executed the tenth amended and restated credit agreement (the “Credit Agreement”) with its existing syndicate of lenders.

As part of this agreement, LPL engaged JPMorgan Chase Bank to refinance the Term Loan A, extending its maturity by two years from December 5, 2026 to December 5, 2028.

Additionally, the Company's borrowing rate applicable to the Term Loan A decreased by 0.125% at all pricing levels.

Issuance of 2028 4.900 % Senior Notes, 2030 5.150 % Senior Notes, and 2035 5.750 % Senior Notes

On April 3, 2025, the Company completed the issuance and sale of $ 500.0 million in aggregate principal amount of 4.900 % senior unsecured notes due 2028 (“2028 4.900 % Senior Notes”), $ 500.0 million in aggregate principal amount of 5.150 % senior unsecured notes due 2030 (“2030 5.150 % Senior Notes”) and $ 500.0 million in aggregate principal amount of 5.750 % senior unsecured notes due 2035 (“2035 5.750 % Senior Notes”).

The proceeds of the issuance were utilized to fund the acquisition of Commonwealth.

The 2028 4.900 % Senior Notes will mature on April 3, 2028, and interest is payable semi-annually.

The Company may redeem all or part of the 2028 4.900 % Senior Notes on or prior to March 3, 2028 at a redemption price that is equal to the greater of:

(i) the remaining scheduled payments of principal and interest discounted at the Treasury Rate (as defined in the Sixth Supplemental Indenture dated April 3, 2025) plus 20 basis points less interest accrued to the redemption date, and (ii) 100 % of the principal amount of the 2028 4.900 % Senior Notes to be redeemed plus accrued interest.

On or after March 3, 2028, the Company may redeem the 2028 4.900 % Senior Notes at 100 % of the principal amount of the notes to be redeemed plus accrued and unpaid interest.

The 2030 5.150 % Senior Notes will mature on June 15, 2030, and interest is payable semi-annually.

The Company may redeem all or part of the 2030 5.150 % Senior Notes on or prior to May 15, 2030 at a redemption price that is equal to the greater of:

(i) the remaining scheduled payments of principal and interest discounted at the Treasury Rate (as defined in the Seventh Supplemental Indenture dated April 3, 2025) plus 20 basis points less interest accrued to the redemption date, and (ii) 100 % of the principal amount of the 2030 5.150 % Senior Notes to be redeemed plus accrued interest.

On or after May 15, 2030, the Company may redeem the 2030 5.150 % Senior Notes at 100 % of the principal amount of the notes to be redeemed plus accrued and unpaid interest.

The 2035 5.750 % Senior Notes will mature on June 15, 2035, and interest is payable semi-annually.

The Company may redeem all or part of the 2035 5.750 % Senior Notes on or prior to March 15, 2035 at a redemption price that is equal to the greater of:

(i) the remaining scheduled payments of principal and interest discounted at the Treasury Rate (as defined in the Eighth Supplemental Indenture dated April 3, 2025) plus 25 basis points less interest accrued to the redemption date, and (ii) 100 % of the principal amount of the 2035 5.750 % Senior Notes to be redeemed plus accrued interest.

On or after March 15, 2035, the Company may redeem the 2035 5.750 % Senior Notes at 100 % of the principal amount of the notes to be redeemed plus accrued and unpaid interest.

In connection with the issuance of the 2028 4.900 % Senior Notes, 2030 5.150 % Senior Notes and 2035 5.750 % Senior Notes, the Company incurred $ 11.0 million in costs, which were capitalized as debt issuance costs in the consolidated statements of financial condition.

LPL FINANCIAL HOLDINGS INC.

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Notes to Consolidated Financial Statements

Refinanced Existing Term Loan B Facility with Term Loan A Facility

On December 5, 2024, LPLH refinanced its existing $ 1.0 billion Term Loan B facility (the “Term Loan B”) with a new $ 1.0 billion Term Loan A facility (the “Term Loan A”).

Term Loan A will mature on December 5, 2026 and will bear interest at a floating rate equal to either (i) the Adjusted Term SOFR Rate (as defined in the Credit Agreement) plus an applicable margin or (ii) the alternate base rate plus an applicable margin, in each case, with such applicable margin determined based on the Company’s senior unsecured debt rating issued by Moody’s Investors Service, Inc.

and Standard & Poor’s Ratings Services.

Term Loan A will bear interest at the Adjusted Term SOFR Rate (which includes a 10 basis points per annum credit spread adjustment) plus 137.5 basis points per annum, compared to the Adjusted Term SOFR Rate plus 175 basis points per annum under the Term Loan B.

The Adjusted Term SOFR Rate is subject to an interest rate floor of 0.0 %, and the alternative base rate is subject to an interest rate floor of 1.0 %.

Issuance of 2030 5.200 % Senior Notes and 2035 5.650 % Senior Notes

On May 20, 2024, LPLH issued $ 500.0 million in aggregate principal amount of 5.700 % senior notes due 2027 (“2027 Senior Notes”) and $ 500.0 million in aggregate principal amount of 6.000 % senior notes due 2034 (the “2034 Senior Notes” and, together with the 2027 Notes, the “Senior Notes”).

The Senior Notes are unsecured obligations of the Company and are fully and unconditionally guaranteed on a senior unsecured basis by LPLFH.

The Company used a portion of the proceeds from the issuance to repay borrowings made under its senior unsecured revolving credit facility and to finance the Atria acquisition.

The 2027 Senior Notes will mature on May 20, 2027, and interest is payable semi-annually.

The Company may redeem all or part of the 2027 Senior Notes on or prior to April 20, 2027 at a redemption price that is equal to the greater of:

(i) the remaining scheduled payments of principal and interest discounted at the Treasury Rate (as defined in the Second Supplemental Indenture dated May 20, 2024) plus 20 basis points less interest accrued to the redemption date, and (ii) 100 % of the principal amount of the 2027 Senior Notes to be redeemed plus accrued interest.

On or after April 20, 2027, the Company may redeem the 2027 Senior Notes at 100 % of the principal amount of the notes to be redeemed plus accrued interest.

The 2034 Senior Notes will mature on May 20, 2034 and interest is payable semi-annually.

On February 26, 2025, LPLH issued $ 750.0 million in aggregate principal amount of 5.200 % senior notes due 2030 (“2030 5.200 % Senior Notes”) and $ 500.0 million in aggregate principal amount of 5.650 % senior notes due 2035 (the “2035 5.650 % Senior Notes”).

The 2030 5.200 % Senior Notes and 2035 5.650 % Senior Notes are unsecured obligations of the Company and are fully and unconditionally guaranteed on a senior unsecured basis by LPLFH.

The Company used a portion of the proceeds from the issuance to repay borrowings made under its senior unsecured revolving credit facility and for general corporate purposes.

The 2030 5.200 % Senior Notes will mature on March 15, 2030, and interest is payable semi-annually.

The Company may redeem all or part of the 2030 5.200 % Senior Notes on or prior to February 15, 2030 at a redemption price that is equal to the greater of:

(i) the remaining scheduled payments of principal and interest discounted at the Treasury Rate (as defined in the Third Supplemental Indenture dated May 20, 2024) plus 25 basis points less interest accrued to the redemption date, and (ii) 100 % of the principal amount of the 2034 Senior Notes to be redeemed plus accrued interest.

(i) the remaining scheduled payments of principal and interest discounted at the Treasury Rate (as defined in the Fourth Supplemental Indenture dated February 26, 2025) plus 15 basis points less interest accrued to the redemption date, and (ii) 100 % of the principal amount of the 2030 5.200 % Senior Notes to be redeemed plus accrued interest.

On or after February 15, 2030, the Company may redeem the 2030 5.200 % Senior Notes at 100 % of the principal amount of the notes to be redeemed plus accrued and unpaid interest.

In connection with the issuance of the Senior Notes, the Company incurred $ 7.1 million in costs, which were capitalized as debt issuance costs in the consolidated statements of financial condition.

Issuance of 2028 Senior Notes

LPLH issued $ 750.0 million in aggregate principal amount of 6.750 % senior notes on November 17, 2023 at 99.929 % (“2028 Senior Notes”).

The 2028 Senior Notes are unsecured obligations that will mature on November 17, 2028, and are fully and unconditionally guaranteed on a senior unsecured basis by LPLFH.

The Company used the proceeds from the issuance to repay borrowings made under its senior unsecured revolving credit facility and for general corporate purposes.

The 2035 5.650 % Senior Notes will mature on March 15, 2035, and interest is payable semi-annually.

The Company may redeem all or part of the 2035 5.650 % Senior Notes on or prior to December 15, 2034 at a redemption price that is equal to the greater of:

(i) the remaining scheduled payments of principal and interest discounted at the Treasury Rate (as defined in the Fifth Supplemental Indenture dated February 26, 2025) plus 20 basis points less interest accrued to the redemption date, and (ii) 100 % of the principal amount of the 2035 5.650 % Senior Notes to be redeemed plus accrued interest.

On or after December 15, 2034, the Company may redeem the 2035 5.650 % Senior Notes at 100 % of the principal amount of the notes to be redeemed plus accrued and unpaid interest.

In connection with the issuance of the 2030 5.200 % Senior Notes and 2035 5.650 % Senior Notes, the Company incurred $ 10.4 million in costs, which were capitalized as debt issuance costs in the consolidated statements of financial condition.

Issuance of 2027 Senior Notes and 2034 Senior Notes

In connection with the issuance of the Senior Notes, the Company incurred $ 7.1 million in costs, which were capitalized as debt issuance costs in the consolidated statements of financial condition.

Credit Agreement and Parent Revolving Credit Facility

On March 13, 2023, LPLFH and LPLH entered into a sixth amendment agreement to the Company’s amended and restated credit agreement (the “Credit Agreement”), which, among other things, replaced LIBOR with SOFR.

On May 20, 2024, LPLH amended its revolving credit facility to, among other things, increase the maximum borrowing from $ 2.0 billion to $ 2.25 billion and extend the maturity of the revolving credit facility to May 2029.

2 unchanged sentences

As of December 31, 2025, the Company was in compliance with such covenants.

LPL FINANCIAL HOLDINGS INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Broker-Dealer Revolving Credit Facility

On May 19, 2025, LPL Financial, the Company’s broker-dealer subsidiary, renewed its revolving credit facility to extend the maturity of the revolving credit facility to May 18, 2026.

The revolving credit facility allows for a maximum borrowing of up to $ 1.0 billion and borrowings under the credit facility bear interest at a rate per annum equal to 1.25 % per annum plus the greatest of (i) SOFR plus 0.10 %, (ii) the effective federal funds rate and (iii) the overnight bank funding rate, in each case, as such rate is administered or determined by the Federal Reserve Bank of New York from time to time.

The revolving credit facility allows for a maximum borrowing of up to $ 1.0 billion and borrowings under the credit facility bear interest at a rate per annum equal to 1.25 % per annum plus the greatest of (i) SOFR, (ii) the effective federal funds rate and (iii) the overnight bank funding rate, in each case, as such rate is administered or determined by the Federal Reserve Bank of New York from time to time.

In connection with the renewal of the credit facility, LPL Financial incurred $ 1.3 million in costs, which were capitalized as debt issuance costs in the consolidated statements of financial condition.

The bro ker-dealer credit agreement subjects LPL Financial to certain financial and non-financial covenants.

The broker-dealer credit agreement subjects LPL Financial to certain financial and non-financial covenants.

LPL Financial was in compliance with such covenants as of December 31, 2025.

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Two of the lines have unspecified limits, which are primarily dependent on LPL Financial’s ability to provide sufficient collateral.

The other three lines have a total limit of $ 200.0 million, of which $ 125.0 million is uncollateralized.

LPL FINANCIAL HOLDINGS INC.

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Notes to Consolidated Financial Statements

three lines have a total limit of $ 200.0 million, of which $ 125.0 million is uncollateralized.

There were no balances outstanding under these lines at December 31, 2025 or December 31, 2024.

1 unchanged sentence

The Company determines if an arrangement is a lease or contains a lease at inception.

The Company has operating and finance leases for corporate offices and equipment with remaining lease terms of 1 to 12 years, some of which include options to extend the lease for up to 20 years.

The Company has operating leases for corporate offices and equipment with remaining lease terms of 1 to 12 years, some of which include options to extend the lease for up to 21 years.

For leases with renewal options, the lease term is extended to reflect renewal options the Company is reasonably certain to exercise.

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Lease expense related to the net present value of payments is recognized on a straight-line basis over the lease term.

Finance lease assets are included in property and equipment, net in the consolidated statements of financial condition and were $ 84.6 million and $ 88.5 million at December 31, 2024 and December 31, 2023, respectively.

The lease for the Company’s Fort Mill, South Carolina office was previously accounted for as a financing lease.

In April 2025, the Company entered into a 20 year credit tenant lease which was accounted for as a financing arrangement as it did not qualify for sale-leaseback accounting primarily due to the existence of an option to purchase the property for $ 1 at the end of the lease term.

As a result of the transaction, the term was extended, a financing obligation of $ 109.3 million was recorded, and the existing finance lease liability of $ 105.0 million was derecognized.

The Company allocated $ 104.0 million and $ 5.3 million to building and land, respectively, in the property and equipment, net line item in the Company's consolidated statements of financial condition.

In connection with the sale-leaseback, the Company incurred incremental costs of $ 2.5 million, which were included in the basis of the amount financed.

The financing obligation has a stated interest rate of 6.4 % and matures on May 1, 2045.

Net carrying values of building and land assets associated with financing obligations were $ 81.3 million and $ 5.3 million, respectively, at December 31, 2025 and are included in property and equipment, net in the consolidated statements of financial condition.

Assets associated with finance leases were $ 84.6 million at December 31, 2024, and were included in property and equipment, net in the consolidated statements of financial condition.

The components of lease expense were as follows (in thousands):

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Notes to Consolidated Financial Statements

Maturities of lease liabilities as of December 31, 2024 were as follows (in thousands):

Operating Leases Finance Leases

2025 $ 36,429 $ 8,879

2026 35,485 9,035

2027 34,412 9,193

2028 33,970 9,354

Maturities of operating lease liabilities as of December 31, 2025 were as follows (in thousands):

2026 $ 48,174

3 unchanged sentences

Total $ 203,970

The minimum calendar year payments and maturities of the financing obligation as of December 31, 2025 were as follows (in thousands):

Thereafter 97,754

Total $ 108,433

NOTE 13 - INCOME TAXES

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Total current provision for income taxes 233,548 410,520 446,979

Deferred (benefit) provision for income taxes:

Deferred provision (benefit) for income taxes:

66,574 ( 66,056 ) ( 56,539 )

( 13,639 ) ( 10,188 ) ( 11,915 )

Total deferred (benefit) provision for income taxes ( 76,244 ) ( 68,454 ) ( 93,349 )

Total deferred provision (benefit) for income taxes

52,935 ( 76,244 ) ( 68,454 )

Provision for income taxes $ 286,483 $ 334,276 $ 378,525

LPL FINANCIAL HOLDINGS INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The following table reflects a reconciliation of the U.S.

federal statutory income tax rates to the Company’s effective income tax rates:

Years Ended December 31,

Year Ended December 31, 2025

Federal at statutory income tax rates

$ 241,413 21.0 %

State income taxes, net of federal benefit (1)

General business credits

( 9,914 ) ( 0.9 )

Changes in unrecognized tax benefits 9,717 0.8

Nontaxable or nondeductible items:

Share-based payment awards ( 4,163 ) ( 0.4 )

Other 1,598 0.2

Effective income tax rate

$ 286,483 24.9 %

(1) State taxes in California, Illinois, New York, Pennsylvania, New Jersey, and Minnesota made up the majority (greater than 50%) of the tax effect in this category.

The following table reflects a reconciliation of the U.S.

federal statutory income tax rates to the Company’s effective income tax rates in accordance with the guidance in effect prior to the adoption of the new income tax disclosure requirements during the year ended December 31, 2025:

Years Ended December 31,

Federal statutory income tax rates 21.0 % 21.0 %

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Effective income tax rates 24.0 % 26.2 %

The Company’s effective income tax rate differs from the federal corporate tax rate of 21.0 % primarily as a result of state taxes, non-deductible expenses, tax credits and benefits from the vesting and exercise of share-based compensation.

The Company’s effective income tax rate differs from the federal corporate tax rate of 21.0 % primarily as a result of state taxes, non-deductible expenses, uncertain tax position reserves, tax credits and benefits from the vesting and exercise of share-based compensation.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

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Capitalized research and development expenditures

22,164 19,294

Accrued liabilities

2 unchanged sentences

17,433 15,323

14,290 19,329

Deferred tax assets

12 unchanged sentences

( 47,019 ) ( 32,167 )

Unrealized gains and losses

( 31,276 ) ( 15,842 )

( 4,743 ) ( 4,169 )

Total deferred tax liabilities

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Deferred tax assets, net $ 78,222 $ 129,902

The decrease in deferred tax assets, net as of December 31, 2024 compared to December 31, 2023 was primarily driven by the 2024 stock acquisition of Atria and the basis difference in net assets acquired.

The decrease in deferred tax assets, net as of December 31, 2025 compared to December 31, 2024 was primarily driven by tax acceleration of Section 174 research and development expenditures.

At December 31, 2025, there were $ 22.3 million of tax credits that can be carried forward 15 years and will begin to expire during 2032, and $ 6.7 million of tax credits that can be carried forward 10 years and will begin to expire during 2032.

We believe that it is more likely than not that the tax credit carryforwards will not be realized and have recorded a valuation allowance of $ 23.2 million on the deferred tax assets related to these tax credit carryforwards.

We believe that it is more likely than not that a portion of the tax credit carryforwards will not be realized and have recorded a valuation allowance of $ 24.1 million on the deferred tax assets related to these tax credit carryforwards.

The following table reflects a reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits (in thousands):

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At December 31, 2025 and 2024, there were $ 45.5 million and $ 40.1 million, respectively, of unrecognized tax benefits that if recognized, would favorably affect the effective income tax rate in any future periods.

The Company accrues interest and penalties related to unrecognized tax benefits in its provision for income taxes within the consolidated statements of financial condition.

At December 31, 2024 and 2023, the liability for

LPL FINANCIAL HOLDINGS INC.

1 unchanged sentence

Notes to Consolidated Financial Statements

unrecognized tax benefits included accrued interest of $ 9.4 million and $ 8.0 million, respectively, and penalties of $ 4.1 million and $ 5.5 million, respectively.

The Company accrues interest and penalties related to unrecognized tax benefits in its provision for income taxes within the consolidated statements of financial condition.

At December 31, 2025 and 2024, the liability for unrecognized tax benefits included accrued interest of $ 12.0 million and $ 9.4 million, respectively, and penalties of $ 4.6 million and $ 4.1 million, respectively.

The Company and its subsidiaries file federal, state and local income tax returns, which are subject to routine examinations by the respective taxing authorities.

2 unchanged sentences

The tax years of 2015 to 2024 remain open to examination in the state jurisdictions.

In the next 12 months it is reasonably possible that the Company may realize a reduction in unrecognized tax benefits of $ 14.2 million related to settlements and the statute of limitations expiration in federal and various state jurisdictions.

Net cash paid (refunds received) for income taxes consisted of the following (in thousands):

Year Ended December 31, 2025

Aggregated state and local jurisdictions (1)

Net cash paid for income taxes

(1) No individual state taxing jurisdiction comprised more than 5% of net cash paid (refunds received).

On July 4, 2025, the One Big Beautiful Bill Act (the “Act”) was enacted into law.

The Act includes several changes to the corporate income tax system, including accelerated tax deductions for qualified property and U.S.

based research expenditures, and modifications to computations of the business interest expense limitation.

The Act did not meaningfully impact our effective tax rate for 2025;

however, the Act reduced our cash tax payments made during 2025.

NOTE 14 - COMMITMENTS AND CONTINGENCIES

3 unchanged sentences

2026 $ 93,277

Thereafter 7,710

Total $ 197,864

3 unchanged sentences

Under these agreements, if a member becomes unable to satisfy its obligations to the clearing houses and exchanges, all other members would be required to meet any shortfall.

T he Company’s liability under these arrangements is not quantifiable and could exceed the cash and securities it has posted as collateral.

The Company’s liability under these arrangements is not quantifiable and could exceed the cash and securities it has posted as collateral.

However, the potential requirement for the Company to make payments under these agreements is remote.

Accordingly, no liability has been recognized for these transactions.

LPL FINANCIAL HOLDINGS INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Loan Commitments

From time to time, LPL Financial makes loans to advisors and institutions, primarily to newly recruited advisors and institutions to assist in the transition process, which may be forgivable.

LPL Financial makes loans to advisors and institutions, primarily to newly recruited advisors and institutions to assist in the transition process, which may be forgivable.

Due to timing differences, LPL Financial may make commitments to issue such loans prior to actually funding them.

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From time to time, such engagements result in regulatory complaints or other matters, the resolution of which has in the past and may in the future include fines, customer restitution and other remediation.

Assessing the probability of a loss occurring and the timing and amount of any loss related to a legal proceeding or regulatory

LPL FINANCIAL HOLDINGS INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

matter is inherently difficult.

Assessing the probability of a loss occurring and the timing and amount of any loss related to a legal proceeding or regulatory matter is inherently difficult.

While the Company exercises significant and complex judgments to make certain estimates presented in its consolidated financial statements, there are particular uncertainties and complexities involved when assessing the potential outcomes of legal proceedings and regulatory matters.

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In August 2024, the Company received a request for information from the SEC regarding certain elements of the Company’s cash management program for corporate advisory accounts.

The Company has been cooperating with the request.

On January 23, 2026, the SEC informed the Company that it had concluded its investigation and did not intend to recommend an enforcement action.

Third-Party Insurance

3 unchanged sentences

The Company has self-insurance for certain potential liabilities through its captive insurance subsidiary.

Liabilities associated with the risks that are retained by the Company are not discounted and are estimated by considering, in part, historical claims experience, severity factors, and actuarial assumptions and estimates.

The estimated accruals for these potential liabilities could be significantly affected if future occurrences and claims differ from such assumptions and historical trends, so there are particular complexities and uncertainties involved when assessing the adequacy of loss reserves for potential liabilities that are self-insured.

Self-insurance liabilities are included in accounts payable and accrued liabilities in the consolidated statements of financial condition.

Self-insurance related charges are included in other expense in the consolidated statements of income.

Liabilities associated with the risks that are retained by the Company are not discounted and are estimated by considering, in

LPL FINANCIAL HOLDINGS INC.

1 unchanged sentence

Notes to Consolidated Financial Statements

part, historical claims experience, severity factors, and actuarial assumptions and estimates.

Self-insurance liabilities are included in accounts payable and accrued liabilities in the consolidated statements of financial condition.

Self-insurance related charges are included in other expense in the consolidated statements of income.

The following table provides a reconciliation of the beginning and ending balances of self-insurance liabilities for the years presented (in thousands):

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Other Commitments

As of December 31, 2024, the Company had approximately $ 568.1 million of client margin loans that were collateralized with securities having a fair value of approximately $ 795.3 million that LPL Financial can repledge, loan or sell.

As of December 31, 2025, the Company had approximately $ 744.5 million of client margin loans that were collateralized with securities having a fair value of approximately $ 1.0 billion that LPL Financial can repledge, loan or sell.

Of these securities, approximately $ 502.5 million were client-owned securities pledged to the Options Clearing Corporation as collateral to secure client obligations related to options positions.

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On September 21, 2022, the Board authorized a $ 2.1 billion increase to the amount available for repurchases of the Company’s issued and outstanding common shares.

As a result of the Company’s acquisition of Atria, the Company paused share repurchases during the first quarter of 2024.

The Company resumed share repurchases in the fourth quarter of 2024 and repurchased 605,361 shares of common stock at a weighted-average price of $ 280.84 for a total of $ 170.0 million during the year ended December 31, 2024.

As of December 31, 2024, the Company had $ 730.0 million remaining under the existing share repurchase program.

Future share repurchases may be effected in open market or privately negotiated transactions, including transactions with affiliates, with the timing of purchases and the amount of stock purchased generally determined at the discretion of the Company within the constraints of the Credit Agreement and the Company’s general working capital needs.

During the year ended December 31, 2025, LPLFH repurchased 289,371 shares of common stock at a weighted-average price of $ 345.59 for a total of $ 100.0 million.

As of December 31, 2025, the Company had $ 630.0 million

LPL FINANCIAL HOLDINGS INC.

1 unchanged sentence

Notes to Consolidated Financial Statements

remaining under the existing share repurchase program.

The Company paused share repurchases in early 2025 in anticipation of the Commonwealth acquisition.

Equity Offering

On April 2, 2025, the Company completed a public offering of approximately 5.4 million shares of the Company’s common stock at an offering price of $ 320.00 per share.

The Company received proceeds of approximately $ 1.7 billion, which were used to fund the acquisition of Commonwealth.

In connection with the issuance, the Company incurred incremental costs of $ 48.1 million, which were recorded as a reduction to the offering proceeds.

See Note 4 - Acquisitions for additional information.

NOTE 16 - SHARE-BASED COMPENSATION, EMPLOYEE INCENTIVES AND BENEFIT PLANS

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Forfeited and Expired

( 146,035 ) $ 58.73

Outstanding — December 31, 2025 65,310 $ 63.23 2.24 $ 19,197

1 unchanged sentence

Exercisable and expected to vest — December 31, 2025 65,310 $ 63.23 2.24 $ 19,197

LPL FINANCIAL HOLDINGS INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The following table summarizes information about outstanding stock options and warrants as of December 31, 2025:

19 unchanged sentences

The Company has not granted stock options or warrants since 2019;

however, during the fourth quarter of 2024, certain previously vested and outstanding stock option awards granted to the Company’s former Chief Executive Officer (“CEO”) were clawed back and certain were modified in connection with his termination for “Cause” as defined in the Company’s Executive Severance Plan, the 2010 Plan, and the 2021 Plan.

The clawback of stock options resulted in $ 2.6 million of other income, which is recorded in other revenue in the consolidated statements of income for the year ended December 31, 2024.

The modification of certain of these previously vested options resulted in $ 12.0 million of share-based compensation expense, which is included in compensation and benefits in

LPL FINANCIAL HOLDINGS INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

the consolidated statements of income.

The modified options were exercised in December 2024, and are included as having been exercised in the table above.

Shares that were clawed back are reflected as having been forfeited in the table above.

The Company recognized no share-based compensation expense related to the vesting of stock options during the year ended December 31, 2023 and $ 0.2 million of share-based compensation expense relating to stock options during the year ended December 31, 2022, respectively.

however, during the fourth quarter of 2024, certain previously vested and outstanding stock option awards granted to the Company’s former Chief Executive Officer (“CEO”) were clawed back and certain awards were modified in connection with his termination for “Cause” as defined in the Company’s Executive Severance Plan, the 2010 Plan, and the 2021 Plan.

The clawback of stock options resulted in $ 2.6 million of other income, which was recorded in other revenue in the consolidated statements of income for the year ended December 31, 2024.

The modification of certain of these previously vested options resulted in $ 12.0 million of share-based compensation expense, which was included in compensation and benefits in the consolidated statements of income.

The modified options were exercised in December 2024.

The Company recognized no share-based compensation expense related to the vesting of stock options during the years ended December 31, 2025 or 2024.

As of December 31, 2025, there was no unrecognized compensation cost related to non-vested stock options as the remaining share-based compensation expense was recognized during the three months ended March 31, 2022.

17 unchanged sentences

The Company recognized $ 64.9 million, $ 66.5 million and $ 57.4 million of share-based compensation expense related to the vesting of these restricted stock awards and stock units during the years ended December 31, 2025, 2024 and 2023, respectively.

As of December 31, 2024, total unrecognized compensation cost for restricted stock awards and stock units was $ 73.3 million, which is expected to be recognized over a weighted-average remaining period of 1.90 years.

As of December 31, 2025, total unrecognized compensation cost for restricted stock awards and stock units was $ 97.0

LPL FINANCIAL HOLDINGS INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

million, which is expected to be recognized over a weighted-average remaining period of 1.9 years.

The Company recognized $ 23.8 million of other income, with an offset to additional paid-in capital, during the three months ended December 31, 2024 relating to the clawback of restricted stock units of the Company’s former CEO’s in connection with his termination for “Cause” as defined in the Company’s Executive Severance Plan, the 2010 Plan, and the 2021 Plan.

The related shares have been reflected as having been forfeited in the table above.

The Company also grants restricted stock units to its advisors and to institutions.

6 unchanged sentences

The Company’s total cost related to the 401(k) plan was $ 40.6 million, $ 35.8 million and $ 30.3 million for the years ended December 31, 2025, 2024 and 2023, respectively, which is classified as compensation and benefits expense in the consolidated statements of income.

The Company established its Employee Stock Purchase Plan (the “ESPP”) as a benefit to enable eligible employees to purchase common stock of LPLFH at a discount from the market price through payroll deductions,

LPL FINANCIAL HOLDINGS INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

subject to limitations.

The ESPP provides for a 15 % discount on the market value of the stock at the lower of the grant date price (first day of the offering period) and the purchase date price (last day of the offering period).

10 unchanged sentences

As of December 31, 2024, the Company had recorded assets of $ 47.2 million and liabilities of $ 45.2 million.

LPL FINANCIAL HOLDINGS INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

NOTE 17 - EARNINGS PER SHARE

12 unchanged sentences

For the years ended December 31, 2025, 2024 and 2023, stock options, warrants and stock units representing common share equivalents of 41,871 shares, 42,918 shares and 55,298 shares, respectively, were anti-dilutive.

LPL FINANCIAL HOLDINGS INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

NOTE 18 - NET CAPITAL AND REGULATORY REQUIREMENTS

The Company’s broker-dealer subsidiaries are subject to the SEC’s Uniform Net Capital Rule (Rule 15c3-1 under the Exchange Act of 1934), which requires the maintenance of minimum net capital.

The net capital rules also provide that a broker-dealer’s capital may not be withdrawn if the resulting net capital would be less than minimum requirements.

The Uniform Net Capital Rule also provides that a broker-dealer’s capital may not be withdrawn if the resulting net capital would be less than minimum requirements.

Additionally, certain withdrawals require the approval of the SEC and the Financial Industry Regulatory Authority to the extent they exceed defined levels, even though such withdrawals would not cause net capital to be less than minimum requirements.

6 unchanged sentences

Excess net capital $ 311,412

The Company’s subsidiary PTC also operates in a highly regulated industry and is subject to various regulatory capital requirements.

Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have substantial monetary and non-monetary impacts on PTC’s operations.

As of December 31, 2024 and 2023, the Company’s regulated subsidiaries, including LPL Financial, LPL Enterprise, Atria’s seven introducing broker-dealer subsidiaries, and PTC, met all capital adequacy requirements to which they were subject.

The Company’s other regulated subsidiaries, including LPL Enterprise, CES, and PTC, are also subject to various regulatory capital requirements.

Failure to meet the respective minimum capital requirements can result in certain mandatory and discretionary actions by regulators that, if undertaken, could have substantial monetary and non-monetary impacts on their operations.

As of December 31, 2025, the Company’s other regulated subsidiaries met all capital adequacy requirements to which they were subject.

LPL FINANCIAL HOLDINGS INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

NOTE 19 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET CREDIT RISK AND CONCENTRATIONS OF CREDIT RISK

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While long inventory positions represent LPL Financial’s ownership of securities, short inventory positions represent obligations of LPL Financial to deliver specified securities at a contracted price, which may differ from market prices prevailing at the time of completion of the transaction.

Accordingly, both long and short inventory positions may result in losses or gains to LPL Financial

LPL FINANCIAL HOLDINGS INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

as market values of securities fluctuate.

Accordingly, both long and short inventory positions may result in losses or gains to LPL Financial as market values of securities fluctuate.

To mitigate the risk of losses, long and short positions are marked-to-market daily and are continuously monitored by LPL Financial.

NOTE 20 - SEGMENT INFORMATION

On October 1, 2024, the Company’s former CEO, Dan H.

Arnold, was terminated for “Cause,” and on October 21, 2024, the Board confirmed Rich Steinmeier as CEO and Matthew Audette as President and Chief Financial Officer (“CFO”).

The Company has concluded that its Chief Operating Decision Maker (“CODM”) is the group that includes the CEO and the President and CFO of the Company.

These changes did not impact the Company’s determination that it has one reportable segment, given the common nature of the Company’s operations, products and services, production and distribution process, and regulatory environment.

The Company's Chief Operating Decision Maker (“CODM”) is the group that includes the Chief Executive Officer and the President and Chief Financial Officer of the Company.

The Company determined that it has one reportable segment, given the common nature of the Company’s operations, products and services, production and distribution process, and regulatory environment.

The Company provides an integrated platform of brokerage and investment advisory services to independent financial advisors and advisors at financial institutions from which the Company derives its revenues and incurs expenses.

1 unchanged sentence

The CODM regularly reviews pre-tax net income as presented on the Company’s consolidated statements of income for purposes of assessing performance and making decisions about resource allocation.

Expenses regularly reviewed by the CODM include those line items reported on the Company’s consolidated statements of income, the most significant of which include advisory and commission, compensation and benefits, and promotional expenses.

See our consolidated financial statements in Part II, “ Item 8.

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data