LPL Financial Holdings Inc

NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These unaudited condensed consolidated financial statements (“condensed 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

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LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements (Unaudited)

that affect the condensed consolidated financial statements and related disclosures. The condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to present fairly the results of operations for the interim periods presented. Actual results could differ from those estimates under different assumptions or conditions and the differences may be material to the condensed consolidated financial statements.

The condensed consolidated financial statements include the accounts of LPLFH and its subsidiaries. Intercompany transactions and balances have been eliminated. The condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the related notes for the year ended December 31, 2024, contained in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”).

Recently Issued or Adopted Accounting Pronouncements

There are no relevant recently issued accounting pronouncements that would materially impact the Company’s condensed consolidated financial statements and related disclosures. There were no new accounting pronouncements adopted during the three months ended March 31, 2025 that materially impacted the Company’s condensed consolidated financial statements and related disclosures.

NOTE 3 -REVENUE

Commission

The following table presents total commission revenue disaggregated by product category (in thousands):

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LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements (Unaudited)

The following table presents sales-based and trailing commission revenue disaggregated by product category (in thousands):

Asset-Based

The following table sets forth asset-based revenue disaggregated by product category (in thousands):

Service and Fee

The following table sets forth service and fee revenue disaggregated by recognition pattern (in thousands):

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

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

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LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements (Unaudited)

Unearned Revenue

The Company records unearned revenue when cash payments are received or due in advance of the Company’s performance obligations, including amounts which are refundable. Unearned revenue increased from $207.6 million as of December 31, 2024 to $270.0 million as of March 31, 2025. The increase in unearned revenue for the three months ended March 31, 2025 is primarily driven by cash payments received or due in advance of satisfying the Company’s performance obligations, partially offset by $206.9 million of revenue recognized during the three months ended March 31, 2025 that was included in the unearned revenue balance as of December 31, 2024.

The Company receives cash in advance for advisory services to be performed and conferences to be held in future periods. For advisory services, revenue is recognized as the Company provides the administration, brokerage and execution services over time to satisfy the performance obligations. For conference revenue, the Company recognizes revenue as the conferences are held.

NOTE 4 -ACQUISITIONS

Entered into a definitive purchase agreement to acquire Commonwealth Financial Network (“Commonwealth”)

On March 31, 2025, the Company announced that it had entered into a definitive purchase agreement to acquire Commonwealth, a privately-held independent wealth management firm headquartered in Massachusetts, for $2.7 billion. As part of the agreement, the Company expects Commonwealth to transition its advisory and brokerage assets to the Company’s platform. The transaction is expected to close in the second half of 2025, and the conversion to the Company’s platform is expected to be completed in mid-2026, subject to the receipt of regulatory approvals and other conditions.

The Company will finance this transaction through a combination of corporate cash and the proceeds from completed debt and equity issuances. 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, and on April 3, 2025, the Company completed the issuance of $500.0 million in aggregate principal amount of 4.900% senior unsecured notes due 2028, $500.0 million in aggregate principal amount of 5.150% senior unsecured notes due 2030 and $500.0 million in aggregate principal amount of 5.750% senior unsecured notes due 2035. See Note 9 - Corporate Debt and Other Borrowings, Net, and Note 11 -Stockholders’ Equity within the notes to the condensed consolidated financial statements for additional information.

Acquisitions Completed in the Current Period

During the three months ended March 31, 2025, the Company completed eleven acquisitions, nine of which were completed under the Liquidity & Succession solution in which the Company buys advisor practices. Two of these acquisitions have been accounted for as business combinations andnine have been accounted for as asset acquisitions.

Business Combinations

Acquisition of The Investment Center, Inc. (“The Investment Center”)

In March 2025, the Company acquired The Investment Center for total consideration of $76.7 million, which included $70.2 million of cash and liabilities of $6.5 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 expects to transition The Investment Center’s brokerage and advisory assets to the Company’s platform in the next several months. 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 and, at March 31, 2025, had provisionally allocated $43.9 million of the consideration to advisor relationships and $32.8 million to goodwill. The advisor relationships were assigned a useful life of 18 years. See Note 7 -Goodwill and Other Intangibles, Net for additional information.

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LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements (Unaudited)

Other Business Combinations

The Company accounted forone other acquisition under the acquisition method of accounting for business combinations. Total consideration for this transaction was $3.8 million, which included $1.8 million of cash, and liabilities of $2.0 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 years following the closing. This contingent consideration may be settled for amounts up to $3.7 million in the years following the closing. At March 31, 2025, the Company had provisionally allocated $3.0 million of the consideration to client relationships, which were assigned a useful life of 14 years, and $0.8 million to goodwill.

Asset Acquisitions

The Company accounted fornine other acquisitions as asset acquisitions. These transactions included total initial consideration of $95.8 million, including $93.8 million which was allocated to client relationships and $2.0 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 $62.9 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. See Note 7 –Goodwill and Other Intangibles, Net, for additional information.

Acquisitions Completed in Prior Periods

Acquisition of Atria Wealth Solutions, Inc.

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

During the three months ended March 31, 2025, the Company recorded purchase accounting adjustments that resulted in a $13.5 million decrease in advisor relationships, a $6.3 million decrease in institutional relationships, a $6.5 million decrease in other receivables, an $8.7 million decrease in other liabilities, a $4.9 million decrease in deferred tax liabilities, and a $0.9 million decrease in accounts payable and accrued liabilities. These cumulative adjustments resulted in a $6.7 million increase to goodwill.

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):

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. The Company determined the fair value for each of its contingent consideration obligations using probability weighted or Monte-Carlo simulation models. These methods use significant unobservable inputs, including forecasted conversion rates and discount rates which are based on the cost of debt and equity. See Note 5 -Fair Value Measurements for additional information.

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LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements (Unaudited)

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

The goodwill primarily includes synergies expected to result from combining operations. Other intangible assets comprised $195.4 million of institutional relationships and $424.7 million of advisor relationships which were each assigned useful lives of 16 years. These intangible assets were valued using the income approach and are included in the Advisor and institution relationships line item in Note 7 - Goodwill and Other Intangibles, Net. 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 three months ended March 31, 2025 were $12.0 million and primarily comprised amounts related to professional services, which were classified as professional services expense in the Company's condensed consolidated statements of income. Atria's results were included in the Company's condensed consolidated statements of income during the three months ended March 31, 2025. For this period, total revenues attributable to Atria were approximately $185.4 million and net income was not material.

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

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

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LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements (Unaudited)

transaction. 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.

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 Company accounted forseven 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. 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 is not yet complete. The goodwill primarily includes synergies expected to result from combining operations and is deductible for tax purposes. See Note 7 –Goodwill and Other Intangibles, Net, for additional information.

Asset Acquisitions

The Company accounted for 16 other acquisitions 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. See Note 7 –Goodwill and Other Intangibles, Net, for additional information.

NOTE 5 -FAIR VALUE MEASUREMENTS

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Inputs used to measure fair value are prioritized within a three-level fair value hierarchy. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

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. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

There have been no transfers of assets or liabilities between these fair value measurement classifications during the three months ended March 31, 2025 or 2024.

The Company’s fair value measurements are evaluated within the fair value hierarchy, based on the nature of inputs used to determine the fair value at the measurement date. At March 31, 2025 and December 31, 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 and U.S. government obligations, which are short term in nature with readily determinable values derived from active markets.

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LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements (Unaudited)

Cash Equivalents Segregated Under Federal or Other Regulations — The Company’s cash equivalents segregated under federal or other regulations include U.S. treasury bills, which are short term in nature with readily determinable values derived from active markets.

Restricted Cash— The Company’s restricted cash is primarily composed of U.S. government obligations and money market funds which are short term in nature with readily determinable values derived from active markets.

Trading Securities and Securities Sold, But Not Yet Purchased — The Company’s trading securities consist of house account model portfolios established and managed for the purpose of benchmarking the performance of its fee-based advisory platforms and temporary positions resulting from the processing of client transactions.

The Company uses prices obtained from independent third-party pricing services to measure the fair value of its trading securities. Prices received from the pricing services are validated when security prices move beyond a certain deviation threshold using various methods including comparison to prices received from additional pricing services, comparison to available quoted market prices and review of other relevant market data including implied yields of major categories of securities. In general, these quoted prices are derived from active markets for identical assets or liabilities. When quoted prices in active markets for identical assets and liabilities are not available, the quoted prices are based on similar assets and liabilities or inputs other than the quoted prices that are observable, either directly or indirectly. For negotiable certificates of deposit and treasury securities, the Company utilizes market-based inputs, including observable market interest rates that correspond to the remaining maturities or the next interest reset dates. At March 31, 2025 and December 31, 2024, the Company did not adjust prices received from the independent third-party pricing services.

Other Assets — The Company’s other assets include: (1) deferred compensation plan assets that are invested in life insurance, money market and other mutual funds, which are actively traded and valued based on quoted market prices; and (2) certain non-traded real estate investment trusts, which are valued using quoted prices for identical or similar securities and other inputs that are observable or can be corroborated by observable market data.

Fractional Shares — The Company’s investment in fractional shares held by customers is reflected in other assets while the related purchase obligation for such shares is reflected in other liabilities. The Company uses prices obtained from independent third-party pricing services to measure the fair value of its investment in fractional shares held by customers and the related repurchase obligation. Prices received from the pricing services are validated when security prices move beyond a certain deviation threshold using various methods including comparison to prices received from additional pricing services, comparison to available quoted market prices and review of other relevant market data including implied yields of major categories of securities. At March 31, 2025 and December 31, 2024, the Company did not adjust prices received from the independent third-party pricing services.

Contingent Consideration — The Company measures contingent consideration liabilities at fair value at the acquisition date, as applicable, and thereafter on a recurring basis using unobservable (Level 3) inputs. These contingent consideration liabilities are reflected in other liabilities. See Note 4 -Acquisitions for additional information.

Level 3 Recurring Fair Value Measurements

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. 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.

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LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements (Unaudited)

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

(1)Equivalency rate is defined as the prevailing market interest rate used to discount future payments.

(1)Equivalency rate is defined as the prevailing market interest rate used to discount future payments.

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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LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements (Unaudited)

Recurring Fair Value Measurements

The following table summarizes the Company’s financial assets and financial liabilities measured at fair value on a recurring basis (in thousands):

(1)Investment in and related repurchase obligation for fractional shares resulting from the Company’s dividend reinvestment program (“DRIP”).

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LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements (Unaudited)

The following table summarizes the Company’s financial assets and financial liabilities measured at fair value on a recurring basis (in thousands):

(1)Investment in and related repurchase obligation for fractional shares resulting from the Company’s DRIP.

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LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements (Unaudited)

Fair Value of Financial Instruments Not Measured at Fair Value

The following tables summarize the carrying values, fair values and fair value hierarchy level classification of financial instruments that are not measured at fair value (in thousands):

(1)Includes repayable loans and forgivable loans which have converted to repayable upon advisor termination or change in agreed upon terms.

(2)Includes cash balances awaiting investment or distribution to plan participants.

(3)Other investments include Depository Trust Company common shares and Federal Reserve stock.

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LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 6 -INVESTMENT SECURITIES

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 PTC to satisfy minimum capital requirements of the Office of the Comptroller of the Currency. 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.

The following table summarizes investment securities (in thousands):

At March 31, 2025, the held-to-maturity securities were scheduled to mature as follows (in thousands):

NOTE 7 -GOODWILL AND OTHER INTANGIBLES, NET

A summary of the activity impacting goodwill is presented below (in thousands):

The Company completed various acquisitions, which were accounted for under the acquisition method of accounting for business combinations and as asset acquisitions, and recorded purchase accounting adjustments during the periods presented. See Note 4 -Acquisitions, for additional information.

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LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements (Unaudited)

The components of other intangibles, net were as follows at March 31, 2025 (in thousands):

(1)During the three months ended March 31, 2025, the Company completed various acquisitions. See Note 4 -Acquisitions, for additional information.

The components of other intangibles, net were as follows at December 31, 2024 (in thousands):

(1)During the year ended December 31, 2024, the Company completed various acquisitions. See Note 4 -Acquisitions, for additional information.

Total amortization of other intangibles was $43.5 million and $29.6 million for the three months ended March 31, 2025 and 2024, respectively. Future amortization is estimated as follows (in thousands):

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LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 8 -OTHER ASSETS AND OTHER LIABILITIES

The components of other assets and other liabilities were as follows (dollars in thousands):

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LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 9 -CORPORATE DEBT AND OTHER BORROWINGS, NET

The Company’s outstanding corporate debt and other borrowings, net were as follows (in thousands):

(1)No leverage or interest coverage maintenance covenants.

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

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LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements (Unaudited)

Issuance of 2030 Senior Notes and 2035 Senior Notes

On February 26, 2025, LPLH issued $750.0 million in aggregate principal amount of 5.200% senior notes due 2030 (“2030 Senior Notes”) and $500.0 million in aggregate principal amount of 5.650% senior notes due 2035 (the “2035 Senior Notes”). The 2030 Senior Notes and 2035 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 Senior Notes will mature on March 15, 2030, and interest is payable semi-annually. The Company may redeem all or part of the 2030 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 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 Senior Notes to be redeemed plus accrued interest. On or after February 15, 2030, the Company may redeem the 2030 Senior Notes at 100% of the principal amount of the notes to be redeemed plus accrued and unpaid interest.

The 2035 Senior Notes will mature on March 15, 2035, and interest is payable semi-annually. The Company may redeem all or part of the 2035 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 Senior Notes to be redeemed plus accrued interest. On or after December 15, 2034, the Company may redeem the 2035 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 Senior Notes and 2035 Senior Notes, the Company incurred $10.4 million in costs, which were capitalized as debt issuance costs in the condensed consolidated statements of financial condition.

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 with a new $1.0 billion Term Loan A facility (the “Term Loan A”) that will mature on December 5, 2026.

Issuance of 2027 Senior Notes and 2034 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”). In connection with the issuance of the 2027 Senior Notes and 2034 Senior Notes, the Company incurred $7.1 million in costs, which were capitalized as debt issuance costs in the condensed consolidated statements of financial condition.

Credit Agreement and Parent Revolving Credit Facility

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. In connection with the amendment of the credit facility, LPLH incurred $8.6 million in costs, which were capitalized as debt issuance costs in the condensed consolidated statements of financial condition.

The Credit Agreement subjects the Company to certain financial and non-financial covenants. As of March 31, 2025, the Company was in compliance with such covenants.

Broker-Dealer Revolving Credit Facility

On May 20, 2024, LPL Financial, the Company’s broker-dealer subsidiary, renewed its revolving credit facility to extend the maturity of the revolving credit facility to May 2025. 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. In connection with the renewal of the credit facility, LPL Financial incurred $1.6 million in costs, which were capitalized as debt issuance costs in the condensed consolidated statements of financial condition. 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 March 31, 2025.

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LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements (Unaudited)

Other External Lines of Credit

LPL Financial maintained five uncommitted lines of credit as of March 31, 2025. 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. There wereno balances outstanding under these lines at March 31, 2025 or December 31, 2024.

Issuance of 2028 Senior Notes, 2030 Senior Notes, and 2035 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, $500.0 million in aggregate principal amount of 5.150% senior unsecured notes due 2030 and $500.0 million in aggregate principal amount of 5.750% senior unsecured notes due 2035. The proceeds of the issuance will be utilized to fund the acquisition of Commonwealth. See Note 4 - Acquisitions within the notes to the condensed consolidated financial statements for additional information.

NOTE 10 -COMMITMENTS AND CONTINGENCIES

Service and Development Contracts

The Company is party to certain long-term contracts for systems and services that enable back-office trade processing and clearing for its product and service offerings.

Guarantees

The Company occasionally enters into contracts that contingently require it to indemnify certain parties against third-party claims. The terms of these obligations vary and, because a maximum obligation is not explicitly stated, the Company has determined that it is not possible to make an estimate of the amount that it could be obligated to pay under such contracts.

LPL Financial provides guarantees to securities clearing houses and exchanges under their standard membership agreements, which require a member to guarantee the performance of other members. 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. 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.

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. Due to timing differences, LPL Financial may make commitments to issue such loans prior to actually funding them. These commitments are generally contingent upon certain events occurring, including the advisor or institution joining LPL Financial. LPL Financial had no significant unfunded loan commitments at March 31, 2025 or December 31, 2024.

Legal and Regulatory Matters

The Company is subject to extensive regulation and supervision by U.S. federal and state agencies and various self-regulatory organizations. The Company and its advisors periodically engage with such agencies and organizations, in the context of examinations or otherwise, to respond to inquiries, informational requests and investigations. 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 matter is inherently difficult. While the Company exercises significant and complex judgments to make certain estimates presented in its condensed consolidated financial statements, there are particular uncertainties and complexities involved when assessing the potential outcomes of legal proceedings and regulatory matters. The Company’s assessment process considers a variety of factors and assumptions, which may include: the procedural status of the matter and any recent developments; prior experience and the experience of others in similar matters; the size and nature of potential exposures; available defenses; the progress of fact discovery; the opinions of counsel and experts; or the potential opportunities for settlement and the status of any settlement discussions. The Company monitors these factors and assumptions for new developments and re-assesses the likelihood that a loss

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LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements (Unaudited)

will occur and the estimated range or amount of loss, if those amounts can be reasonably determined. 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.

In February 2023, the Company received a request for information from the SEC in connection with an investigation of certain elements of the Company’s Anti-Money Laundering compliance program. In 2024, the SEC proposed a resolution, under which the Company would pay an $18.0 million civil monetary penalty. As a result, the Company recorded $18.0 million in other expense in the consolidated statements of income for the year ended December 31, 2024. The Company reached a settlement with the staff of the SEC and paid the civil monetary penalty in January 2025.

In July 2024, putative class action lawsuits were filed against LPL Financial in federal district court alleging certain violations of law in connection with its cash sweep programs. The Company intends to defend vigorously against the lawsuits.

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.

Third-Party Insurance

The Company maintains third-party insurance coverage for certain potential legal proceedings, including those involving certain client claims. With respect to such client claims, the estimated losses on many of the pending matters are less than the applicable deductibles of the insurance policies.

Self-Insurance

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

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

Other Commitments

As of March 31, 2025, the Company had approximately $566.2 million of client margin loans that were collateralized with securities having a fair value of approximately $792.7 million that LPL Financial can repledge, loan or sell. Of these securities, approximately $332.2 million were client-owned securities pledged to the Options Clearing Corporation as collateral to secure client obligations related to options positions. As of March 31, 2025, there were no restrictions that materially limited the Company’s ability to repledge, loan or sell the remaining $460.5 million of client collateral.

Investment securities on the condensed consolidated statements of financial condition include $9.9 million and $8.5 million of trading securities pledged to the Options Clearing Corporation at March 31, 2025 and December 31, 2024, respectively, and $24.7 million and $20.0 million of trading securities pledged to the National Securities Clearing Corporation at March 31, 2025 and December 31, 2024, respectively.