QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
x | Accelerated Filer | ☐ | |
Non-accelerated Filer | ☐ | Smaller Reporting Company | |
Emerging Growth Company |
TABLE OF CONTENTS | Page |
• Alternative Investments | • Retirement Plan Products | |
• Annuities | • Separately Managed Accounts | |
• Exchange Traded Products | • Structured Products | |
• Insurance Based Products | • Unit Investment Trusts | |
• Mutual Funds |
As of and for the Nine Months Ended September 30, | ||||||||||
Operating and Business Metrics (dollars in billions)(1) | 2020 | 2019 | % Change | |||||||
Advisory assets(2)(3) | $ | 405.9 | $ | 338.0 | 20 | % | ||||
Brokerage assets(2)(4) | 404.4 | 381.3 | 6 | % | ||||||
Total Advisory and Brokerage Assets served(2) | $ | 810.4 | $ | 719.3 | 13 | % | ||||
Net new advisory assets(5) | $ | 33.7 | $ | 22.8 | n/m | |||||
Net new brokerage assets(6) | 4.7 | 1.0 | n/m | |||||||
Total Advisory and Brokerage Net New Assets | $ | 38.4 | $ | 23.8 | n/m | |||||
Insured cash account balances(2) | $ | 34.7 | $ | 22.2 | 56 | % | ||||
Deposit cash account balances(2) | 8.0 | 4.6 | 74 | % | ||||||
Total Insured Sweep Balances | 42.7 | 26.8 | 59 | % | ||||||
Money market account balances(2) | 1.5 | 2.6 | (42 | %) | ||||||
Purchased money market fund balances(2) | 2.3 | 1.8 | 28 | % | ||||||
Total Client Cash Balances | $ | 46.6 | $ | 31.2 | 49 | % | ||||
Advisors | 17,168 | 16,349 | 5 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
Financial Metrics (dollars in millions, except per share data) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Total net revenues | $ | 1,460.3 | $ | 1,415.5 | $ | 4,290.4 | $ | 4,177.0 | |||||||
Recurring gross profit rate (trailing twelve months)(7) | 86.1 | % | 87.1 | % | 86.1 | % | 87.1 | % | |||||||
Pre-tax income | $ | 135.3 | $ | 178.0 | $ | 480.2 | $ | 576.8 | |||||||
Net income | $ | 103.8 | $ | 131.7 | $ | 361.1 | $ | 433.2 | |||||||
Earnings per share, diluted | $ | 1.29 | $ | 1.57 | $ | 4.48 | $ | 5.07 | |||||||
Non-GAAP Financial Measures(8) | |||||||||||||||
Gross profit(9) | $ | 505.7 | $ | 542.5 | $ | 1,569.5 | $ | 1,634.1 | |||||||
Gross profit (decrease)/increase from prior period(9) | (6.8 | %) | 10.0 | % | (4.0 | %) | 13.5 | % | |||||||
Gross profit as a % of net revenues(9) | 34.6 | % | 38.3 | % | 36.6 | % | 39.1 | % |
(1) | Totals may not foot due to rounding. |
(2) | Advisory and brokerage assets consists of assets that are custodied, networked and non-networked and reflect market movement in addition to new assets, inclusive of new business development and net of attrition. Insured cash account balances, deposit cash account balances, money market account balances and purchased money market fund balances are also included in advisory and brokerage assets served. |
(3) | Advisory assets consists of total advisory assets under custody at our broker-dealer subsidiary, LPL Financial LLC (“LPL Financial”). See Results of Operations for a tabular presentation of advisory assets. |
(4) | Brokerage assets consists of assets serviced by advisors licensed with LPL Financial. |
(5) | Net new advisory assets consists of total client deposits into custodied advisory accounts less total client withdrawals from custodied advisory accounts, plus dividends, plus interest, minus advisory fees. We consider conversions from and to brokerage accounts as deposits and withdrawals, respectively. Figures for net new advisory assets reported prior to April 2020 did not include dividends and interest or subtract advisory fees. The figure previously reported for the nine months ended September 30, 2019 was an inflow of $20.4 billion. |
(6) | Net new brokerage assets consists of total client deposits into brokerage accounts less total client withdrawals from brokerage accounts, plus dividends, plus interest. We consider conversions from and to advisory accounts as deposits and withdrawals, respectively. Figures for net new brokerage assets reported prior to April 2020 did not include dividends and interest. The figure previously reported for the nine months ended September 30, 2019 was an outflow of $2.6 billion. |
(7) | Recurring gross profit rate refers to the percentage of our gross profit, a non-GAAP financial measure, that was recurring for the period presented. We track recurring gross profit, a characterization of gross profit and a statistical measure, which is defined to include asset-based revenues, advisory revenues, trailing commission revenues and certain other fee revenues that are based upon the number of client accounts and advisors, less the expenses associated with such revenues and certain other recurring expenses not specifically associated with a revenue line. We allocate other recurring expenses on a pro-rata basis against specific revenue lines at our discretion. Because certain sources of recurring gross profit are associated with asset balances, they will fluctuate depending on the market values and current interest rates. Accordingly, our recurring gross profit can be negatively impacted by adverse external market conditions. However, we believe that recurring gross profit is meaningful despite these fluctuations because it is not dependent upon transaction volumes or other activity-based revenues, which are more difficult to predict, particularly in declining or volatile markets. |
(8) | We believe that presenting certain non-GAAP financial measures by excluding or including certain items can be helpful to investors and analysts who may wish to use some or all of this information to analyze our current performance, prospects, and valuation. Our management uses this non-GAAP information internally to evaluate operating performance and in formulating the budget for future periods. We believe that the non-GAAP financial measures and metrics presented above and discussed below are appropriate for evaluating the performance of the Company. |
(9) | Set forth below is a calculation of gross profit, calculated as net revenues less commission and advisory expenses and brokerage, clearing and exchange fees. All other expense categories, including depreciation and amortization of fixed assets and amortization of intangible assets, are considered general and administrative in nature. Because our gross profit amounts do not include any depreciation and amortization expense, we consider our gross profit amounts to be non-GAAP financial measures that may not be comparable to those of others in our industry. We believe that gross profit amounts can provide investors with useful insight into our core operating performance before indirect costs that are general and administrative in nature. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
Gross Profit (in millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Total net revenues | $ | 1,460.3 | $ | 1,415.5 | $ | 4,290.4 | $ | 4,177.0 | |||||||
Commission and advisory expense | 936.8 | 856.6 | 2,667.4 | 2,494.4 | |||||||||||
Brokerage, clearing and exchange fees | 17.8 | 16.4 | 53.4 | 48.5 | |||||||||||
Gross profit(1) | $ | 505.7 | $ | 542.5 | $ | 1,569.5 | $ | 1,634.1 |
(1) | Totals may not foot due to rounding. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||
(Dollars in thousands) | 2020 | 2019 | % Change | 2020 | 2019 | % Change | |||||||||||||||
REVENUES | |||||||||||||||||||||
Commission | $ | 472,643 | $ | 474,993 | (0.5 | )% | $ | 1,403,540 | $ | 1,415,487 | (0.8 | )% | |||||||||
Advisory | 586,941 | 514,363 | 14.1 | % | 1,689,338 | 1,449,610 | 16.5 | % | |||||||||||||
Asset-based | 253,551 | 292,140 | (13.2 | )% | 786,124 | 877,054 | (10.4 | )% | |||||||||||||
Transaction and fee | 119,747 | 121,222 | (1.2 | )% | 376,321 | 362,037 | 3.9 | % | |||||||||||||
Interest income, net of interest expense | 6,623 | 11,531 | (42.6 | )% | 22,705 | 35,542 | (36.1 | )% | |||||||||||||
Other | 20,796 | 1,276 | 1,529.8 | % | 12,329 | 37,231 | (66.9 | )% | |||||||||||||
Total net revenues | 1,460,301 | 1,415,525 | 3.2 | % | 4,290,357 | 4,176,961 | 2.7 | % | |||||||||||||
EXPENSES | |||||||||||||||||||||
Commission and advisory | 936,766 | 856,635 | 9.4 | % | 2,667,408 | 2,494,355 | 6.9 | % | |||||||||||||
Compensation and benefits | 151,271 | 138,300 | 9.4 | % | 441,393 | 407,000 | 8.5 | % | |||||||||||||
Promotional | 57,970 | 61,715 | (6.1 | )% | 159,908 | 154,487 | 3.5 | % | |||||||||||||
Depreciation and amortization | 27,548 | 24,062 | 14.5 | % | 81,082 | 70,116 | 15.6 | % | |||||||||||||
Amortization of intangible assets | 16,829 | 16,286 | 3.3 | % | 50,088 | 48,703 | 2.8 | % | |||||||||||||
Occupancy and equipment | 41,874 | 34,417 | 21.7 | % | 124,486 | 100,843 | 23.4 | % | |||||||||||||
Professional services | 12,301 | 17,666 | (30.4 | )% | 40,526 | 56,115 | (27.8 | )% | |||||||||||||
Brokerage, clearing and exchange | 17,834 | 16,380 | 8.9 | % | 53,423 | 48,518 | 10.1 | % | |||||||||||||
Communications and data processing | 12,547 | 12,535 | 0.1 | % | 37,743 | 37,394 | 0.9 | % | |||||||||||||
Other | 24,852 | 27,599 | (10.0 | )% | 73,274 | 83,977 | (12.7 | )% | |||||||||||||
Total operating expenses | 1,299,792 | 1,205,595 | 7.8 | % | 3,729,331 | 3,501,508 | 6.5 | % | |||||||||||||
Non-operating interest expense and other | 25,179 | 31,944 | (21.2 | )% | 80,786 | 98,617 | (18.1 | )% | |||||||||||||
INCOME BEFORE PROVISION FOR INCOME TAXES | 135,330 | 177,986 | (24.0 | )% | 480,240 | 576,836 | (16.7 | )% | |||||||||||||
PROVISION FOR INCOME TAXES | 31,541 | 46,272 | (31.8 | )% | 119,148 | 143,632 | (17.0 | )% | |||||||||||||
NET INCOME | $ | 103,789 | $ | 131,714 | (21.2 | )% | $ | 361,092 | $ | 433,204 | (16.6 | )% |
Three Months Ended September 30, | ||||||||||||||
2020 | 2019 | $ Change | % Change | |||||||||||
Sales-based | $ | 180,357 | $ | 194,342 | $ | (13,985 | ) | (7.2 | )% | |||||
Trailing | 292,286 | 280,651 | 11,635 | 4.1 | % | |||||||||
Total commission revenue | $ | 472,643 | $ | 474,993 | $ | (2,350 | ) | (0.5 | )% |
Nine Months Ended September 30, | ||||||||||||||
2020 | 2019 | $ Change | % Change | |||||||||||
Sales-based | $ | 568,260 | $ | 588,872 | $ | (20,612 | ) | (3.5 | )% | |||||
Trailing | 835,280 | 826,615 | 8,665 | 1.0 | % | |||||||||
Total commission revenue | $ | 1,403,540 | $ | 1,415,487 | $ | (11,947 | ) | (0.8 | )% |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Balance - Beginning of period | $ | 386.4 | $ | 378.7 | $ | 398.6 | $ | 346.0 | |||||||
Net new brokerage assets(1) | 0.7 | 1.8 | 4.7 | 1.0 | |||||||||||
Market impact(2) | 17.3 | 0.8 | 1.1 | 34.3 | |||||||||||
Balance - End of period | $ | 404.4 | $ | 381.3 | $ | 404.4 | $ | 381.3 |
(1) | Net new brokerage assets consists of total client deposits into brokerage accounts less total client withdrawals from brokerage accounts, plus dividends, plus interest. We consider conversions from and to advisory accounts as deposits and withdrawals, respectively. Previously reported figures for net new brokerage assets did not include dividends and interest. The figures previously reported for the three and nine months ended September 30, 2019 were an inflow of $0.6 billion and an outflow of $2.6 billion, respectively. |
(2) | Market impact is the difference between the beginning and ending asset balance less the net new asset amounts, representing the implied growth or decline in asset balances due to market changes over the same period of time. |
September 30, | ||||||||||||||
2020 | 2019 | $ Change | % Change | |||||||||||
Corporate platform advisory assets | $ | 253.9 | $ | 209.4 | $ | 44.5 | 21.3 | % | ||||||
Hybrid platform advisory assets | 152.0 | 128.6 | 23.4 | 18.2 | % | |||||||||
Total advisory assets(1) | $ | 405.9 | $ | 338.0 | $ | 67.9 | 20.1 | % |
(1) | Totals may not foot due to rounding. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Balance - Beginning of period | $ | 375.3 | $ | 327.3 | $ | 365.8 | $ | 282.0 | |||||||
Net new advisory assets(1) | 10.4 | 10.1 | 33.7 | 22.8 | |||||||||||
Market impact(2) | 20.2 | 0.6 | 6.4 | 33.2 | |||||||||||
Balance - End of period | $ | 405.9 | $ | 338.0 | $ | 405.9 | $ | 338.0 |
(1) | Net new advisory assets consists of total client deposits into custodied advisory accounts less total client withdrawals from custodied advisory accounts, plus dividends, plus interest, minus advisory fees. We consider conversions from and to brokerage accounts as deposits and withdrawals, respectively. Previously reported figures for net new advisory assets did not include dividends and interest or subtract advisory fees. The figures previously reported for the three and nine months ended September 30, 2019 were an inflow of $9.2 billion and $20.4 billion, respectively. |
(2) | Market impact is the difference between the beginning and ending asset balance less the net new asset amounts, representing the implied growth or decline in asset balances due to market changes over the same period of time. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||
Base payout rate(1) | 82.97 | % | 83.05 | % | (8 bps) | 82.78 | % | 83.13 | % | (35 bps) | |||||
Production based bonuses | 3.65 | % | 3.61 | % | 4 bps | 3.18 | % | 2.96 | % | 22 bps | |||||
Total payout ratio(2) | 86.62 | % | 86.66 | % | (4 bps) | 85.96 | % | 86.09 | % | (13 bps) |
(1) | Our base payout rate is calculated as commission and advisory expenses less production based bonuses and mark-to-market gains or losses on the non-qualified deferred compensation plan, divided by commission and advisory revenues. |
(2) | Totals may not foot due to rounding. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | ||||||
Average number of employees | 4,634 | 4,376 | 5.9% | 4,504 | 4,323 | 4.2% |
Nine Months Ended September 30, | |||||||
2020 | 2019 | ||||||
Net cash flows provided by (used in): | |||||||
Operating activities | $ | 463,667 | $ | 509,769 | |||
Investing activities | (132,092 | ) | (129,129 | ) | |||
Financing activities | (260,138 | ) | (434,076 | ) | |||
Net increase (decrease) in cash, cash equivalents and restricted cash | 71,437 | (53,436 | ) | ||||
Cash, cash equivalents and restricted cash — beginning of period | 1,471,778 | 1,562,119 | |||||
Cash, cash equivalents and restricted cash — end of period | $ | 1,543,215 | $ | 1,508,683 |
• | incur additional indebtedness or issue disqualified stock or preferred stock; |
• | declare dividends, or other distributions to stockholders; |
• | repurchase equity interests; |
• | redeem indebtedness that is subordinated in right of payment to certain debt instruments; |
• | make investments or acquisitions; |
• | create liens; |
• | sell assets; |
• | guarantee indebtedness; |
• | engage in certain transactions with affiliates; |
• | enter into agreements that restrict dividends or other payments from subsidiaries; and |
• | consolidate, merge or transfer all or substantially all of our assets. |
Financial Ratio | Covenant Requirement | Actual Ratio | |
Leverage Test (Maximum) | 5.00 | 2.15 | |
Interest Coverage (Minimum) | 3.00 | 9.4 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
REVENUES | ||||||||||||||||
Commission | $ | $ | $ | $ | ||||||||||||
Advisory | ||||||||||||||||
Asset-based | ||||||||||||||||
Transaction and fee | ||||||||||||||||
Interest income, net of interest expense | ||||||||||||||||
Other | ||||||||||||||||
Total net revenues | ||||||||||||||||
EXPENSES | ||||||||||||||||
Commission and advisory | ||||||||||||||||
Compensation and benefits | ||||||||||||||||
Promotional | ||||||||||||||||
Depreciation and amortization | ||||||||||||||||
Amortization of intangible assets | ||||||||||||||||
Occupancy and equipment | ||||||||||||||||
Professional services | ||||||||||||||||
Brokerage, clearing and exchange | ||||||||||||||||
Communications and data processing | ||||||||||||||||
Other | ||||||||||||||||
Total operating expenses | ||||||||||||||||
Non-operating interest expense and other | ||||||||||||||||
INCOME BEFORE PROVISION FOR INCOME TAXES | ||||||||||||||||
PROVISION FOR INCOME TAXES | ||||||||||||||||
NET INCOME | $ | $ | $ | $ | ||||||||||||
EARNINGS PER SHARE (Note 13) | ||||||||||||||||
Earnings per share, basic | $ | $ | $ | $ | ||||||||||||
Earnings per share, diluted | $ | $ | $ | $ | ||||||||||||
Weighted-average shares outstanding, basic | ||||||||||||||||
Weighted-average shares outstanding, diluted |
ASSETS | September 30, 2020 | December 31, 2019 | |||||
Cash and cash equivalents | $ | $ | |||||
Cash segregated under federal and other regulations | |||||||
Restricted cash | |||||||
Receivables from: | |||||||
Clients, net of allowance of $399 at September 30, 2020 and $115 at December 31, 2019 | |||||||
Product sponsors, broker-dealers and clearing organizations | |||||||
Advisor loans, net of allowance of $6,324 at September 30, 2020 and $3,974 at December 31, 2019 | |||||||
Others, net of allowance of $3,246 at September 30, 2020 and $10,292 at December 31, 2019 | |||||||
Securities owned: | |||||||
Trading — at fair value | |||||||
Held-to-maturity — at amortized cost | |||||||
Securities borrowed | |||||||
Fixed assets, net of accumulated depreciation and amortization of $467,659 at September 30, 2020 and $388,355 at December 31, 2019 | |||||||
Operating lease assets | |||||||
Goodwill | |||||||
Intangible assets, net of accumulated amortization of $594,741 at September 30, 2020 and $544,653 at December 31, 2019 | |||||||
Deferred income taxes, net | |||||||
Other assets | |||||||
Total assets | $ | $ | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
LIABILITIES: | |||||||
Drafts payable | $ | $ | |||||
Payables to clients | |||||||
Payables to broker-dealers and clearing organizations | |||||||
Accrued commission and advisory expenses payable | |||||||
Accounts payable and accrued liabilities | |||||||
Income taxes payable | |||||||
Unearned revenue | |||||||
Securities sold, but not yet purchased — at fair value | |||||||
Long-term and other borrowings, net | |||||||
Operating lease liabilities | |||||||
Finance lease liabilities | |||||||
Deferred income taxes, net | |||||||
Total liabilities | |||||||
Commitments and contingencies (Note 10) | |||||||
STOCKHOLDERS’ EQUITY: | |||||||
Common stock, $.001 par value; 600,000,000 shares authorized; 127,409,741 shares issued at September 30, 2020 and 126,494,028 shares issued at December 31, 2019 | |||||||
Additional paid-in capital | |||||||
Treasury stock, at cost — 48,134,535 shares at September 30, 2020 and 46,259,989 shares at December 31, 2019 | ( | ) | ( | ) | |||
Retained earnings | |||||||
Total stockholders’ equity | |||||||
Total liabilities and stockholders’ equity | $ | $ |
Three Months Ended September 30, 2019 | |||||||||||||||||||||||||||||
Additional Paid-In Capital | Accumulated Other Comprehensive Income (loss) | Retained Earnings | Total Stockholders’ Equity | ||||||||||||||||||||||||||
Common Stock | Treasury Stock | ||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||
BALANCE — June 30, 2019 | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||
Net income, net of tax expense | |||||||||||||||||||||||||||||
Issuance of common stock to settle restricted stock units, net | ( | ) | ( | ) | |||||||||||||||||||||||||
Treasury stock purchases | ( | ) | ( | ) | |||||||||||||||||||||||||
Cash dividends on common stock | ( | ) | ( | ) | |||||||||||||||||||||||||
Stock option exercises and other | ( | ) | |||||||||||||||||||||||||||
Share-based compensation | — | — | |||||||||||||||||||||||||||
BALANCE — September 30, 2019 | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||
Three Months Ended September 30, 2020 | |||||||||||||||||||||||||||||
Additional Paid-In Capital | Accumulated Other Comprehensive Income (loss) | Retained Earnings | Total Stockholders’ Equity | ||||||||||||||||||||||||||
Common Stock | Treasury Stock | ||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||
BALANCE — June 30, 2020 | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||
Net income, net of tax expense | |||||||||||||||||||||||||||||
Issuance of common stock to settle restricted stock units, net | ( | ) | ( | ) | |||||||||||||||||||||||||
Cash dividends on common stock | ( | ) | ( | ) | |||||||||||||||||||||||||
Stock option exercises and other | ( | ) | |||||||||||||||||||||||||||
Share-based compensation | — | — | |||||||||||||||||||||||||||
BALANCE — September 30, 2020 | $ | $ | $ | ( | ) | $ | $ | $ |
Nine Months Ended September 30, 2019 | |||||||||||||||||||||||||||||
Additional Paid-In Capital | Accumulated Other Comprehensive Income (loss) | Retained Earnings | Total Stockholders’ Equity | ||||||||||||||||||||||||||
Common Stock | Treasury Stock | ||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||
BALANCE — December 31, 2018 | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||
Cumulative effect of accounting change | |||||||||||||||||||||||||||||
Net income, net of tax expense | |||||||||||||||||||||||||||||
Issuance of common stock to settle restricted stock units, net | ( | ) | ( | ) | |||||||||||||||||||||||||
Treasury stock purchases | ( | ) | ( | ) | |||||||||||||||||||||||||
Cash dividends on common stock | ( | ) | ( | ) | |||||||||||||||||||||||||
Stock option exercises and other | ( | ) | |||||||||||||||||||||||||||
Share-based compensation | — | ||||||||||||||||||||||||||||
BALANCE — September 30, 2019 | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||
Nine Months Ended September 30, 2020 | |||||||||||||||||||||||||||||
Additional Paid-In Capital | Accumulated Other Comprehensive Income (loss) | Retained Earnings | Total Stockholders’ Equity | ||||||||||||||||||||||||||
Common Stock | Treasury Stock | ||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||
BALANCE — December 31, 2019 | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||
Cumulative effect of accounting change | ( | ) | ( | ) | |||||||||||||||||||||||||
Net income, net of tax expense | |||||||||||||||||||||||||||||
Issuance of common stock to settle restricted stock units, net | ( | ) | ( | ) | |||||||||||||||||||||||||
Treasury stock purchases | ( | ) | ( | ) | |||||||||||||||||||||||||
Cash dividends on common stock | ( | ) | ( | ) | |||||||||||||||||||||||||
Stock option exercises and other | ( | ) | |||||||||||||||||||||||||||
Share-based compensation | |||||||||||||||||||||||||||||
BALANCE — September 30, 2020 | $ | $ | $ | ( | ) | $ | $ | $ |
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) | |||||||||
Nine Months Ended September 30, | |||||||||
2020 | 2019 | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||
Net income | $ | $ | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||
Noncash items: | |||||||||
Depreciation and amortization | |||||||||
Amortization of intangible assets | |||||||||
Amortization of debt issuance costs | |||||||||
Share-based compensation | |||||||||
Provision for bad debts | |||||||||
Deferred income tax provision | ( | ) | |||||||
Loan forgiveness | |||||||||
Other | ( | ) | ( | ) | |||||
Changes in operating assets and liabilities: | |||||||||
Receivables from clients | ( | ) | |||||||
Receivables from product sponsors, broker-dealers and clearing organizations | ( | ) | ( | ) | |||||
Advisor loans | ( | ) | ( | ) | |||||
Receivables from others | ( | ) | ( | ) | |||||
Securities owned | ( | ) | |||||||
Securities borrowed | ( | ) | ( | ) | |||||
Operating leases | ( | ) | ( | ) | |||||
Other assets | ( | ) | ( | ) | |||||
Drafts payable | ( | ) | ( | ) | |||||
Payables to clients | |||||||||
Payables to broker-dealers and clearing organizations | ( | ) | |||||||
Accrued commission and advisory expenses payable | ( | ) | |||||||
Accounts payable and accrued liabilities | |||||||||
Income taxes receivable/payable | ( | ) | ( | ) | |||||
Unearned revenue | |||||||||
Securities sold, but not yet purchased | |||||||||
Net cash provided by operating activities | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||
Capital expenditures | ( | ) | ( | ) | |||||
Acquisitions, net of cash acquired | ( | ) | ( | ) | |||||
Purchase of securities classified as held-to-maturity | ( | ) | ( | ) | |||||
Proceeds from maturity of securities classified as held-to-maturity | |||||||||
Net cash used in investing activities | ( | ) | ( | ) | |||||
Continued on following page | |||||||||
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) | ||||||||
Nine Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from revolving credit facility | ||||||||
Repayments of revolving credit facility | ( | ) | ( | ) | ||||
Repayment of senior secured term loans | ( | ) | ( | ) | ||||
Payment of debt issuance costs | ( | ) | ||||||
Payment of contingent consideration | ( | ) | ||||||
Tax payments related to settlement of restricted stock units | ( | ) | ( | ) | ||||
Repurchase of common stock | ( | ) | ( | ) | ||||
Dividends on common stock | ( | ) | ( | ) | ||||
Proceeds from stock option exercises and other | ||||||||
Principal payment of finance leases and obligations | ( | ) | ( | ) | ||||
Net cash used in financing activities | ( | ) | ( | ) | ||||
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | ( | ) | ||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period | ||||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period | $ | $ | ||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
Interest paid | $ | $ | ||||||
Income taxes paid | $ | $ | ||||||
NONCASH DISCLOSURES: | ||||||||
Capital expenditures included in accounts payable and accrued liabilities | $ | $ | ||||||
Lease assets obtained in exchange for operating lease liabilities | $ | $ |
September 30, | ||||||||
2020 | 2019 | |||||||
Cash and cash equivalents | $ | $ | ||||||
Cash segregated under federal and other regulations | ||||||||
Restricted cash | ||||||||
Total cash, cash equivalents and restricted cash shown in the statement of cash flows | $ | $ |
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) |
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) |
September 30, 2020 | |||
Beginning balance — January 1 | $ | ||
Impact of ASU 2016-13 adoption | |||
Provision for bad debts | |||
Charge-offs, net of recoveries | |||
Ending balance — September 30 | $ |
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) |
September 30, 2020 | |||
Beginning balance — January 1 | $ | ||
Impact of ASU 2016-13 adoption | |||
Provision for bad debts | |||
Charge-offs, net of recoveries | ( | ) | |
Ending balance — September 30 | $ |
September 30, 2020 | |||
Beginning balance — January 1 | $ | ||
Impact of ASU 2016-13 adoption | |||
Provision for bad debts | |||
Charge-offs, net of recoveries | ( | ) | |
Ending balance — September 30 | $ |
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Commission revenue | |||||||||||||||
Annuities | $ | $ | $ | $ | |||||||||||
Mutual funds | |||||||||||||||
Fixed income | |||||||||||||||
Equities | |||||||||||||||
Other | |||||||||||||||
Total commission revenue | $ | $ | $ | $ |
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Commission revenue | |||||||||||||||
Sales-based | |||||||||||||||
Annuities | $ | $ | $ | $ | |||||||||||
Mutual funds | |||||||||||||||
Fixed income | |||||||||||||||
Equities | |||||||||||||||
Other | |||||||||||||||
Total sales-based revenue | $ | $ | $ | $ | |||||||||||
Trailing | |||||||||||||||
Annuities | $ | $ | $ | $ | |||||||||||
Mutual funds | |||||||||||||||
Other | |||||||||||||||
Total trailing revenue | $ | $ | $ | $ | |||||||||||
Total commission revenue | $ | $ | $ | $ |
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Asset-based revenue | |||||||||||||||
Client cash | $ | $ | $ | $ | |||||||||||
Sponsorship programs | |||||||||||||||
Recordkeeping | |||||||||||||||
Total asset-based revenue | $ | $ | $ | $ |
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Transaction and fee revenue | |||||||||||||||
Point-in-time(1) | $ | $ | $ | $ | |||||||||||
Over time(2) | |||||||||||||||
Total transaction and fee revenue | $ | $ | $ | $ |
(1) | Transaction and fee revenue recognized point-in-time includes revenue such as transaction fees, IRA termination fees and technology fees. |
(2) | Transaction and fee revenue recognized over time includes revenue such as error and omission insurance fees, IRA custodian fees and technology fees. |
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) |
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) |
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets | |||||||||||||||
Cash equivalents | $ | $ | $ | $ | |||||||||||
Securities owned — trading: | |||||||||||||||
Money market funds | |||||||||||||||
Mutual funds | |||||||||||||||
Equity securities | |||||||||||||||
Debt securities | |||||||||||||||
U.S. treasury obligations | |||||||||||||||
Total securities owned — trading | |||||||||||||||
Other assets | |||||||||||||||
Total assets at fair value | $ | $ | $ | $ | |||||||||||
Liabilities | |||||||||||||||
Securities sold, but not yet purchased: | |||||||||||||||
Equity securities | $ | $ | $ | $ | |||||||||||
Debt securities | |||||||||||||||
Total securities sold, but not yet purchased | |||||||||||||||
Total liabilities at fair value | $ | $ | $ | $ |
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) |
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets | |||||||||||||||
Cash equivalents | $ | $ | $ | $ | |||||||||||
Securities owned — trading: | |||||||||||||||
Money market funds | |||||||||||||||
Mutual funds | |||||||||||||||
Equity securities | |||||||||||||||
Debt securities | |||||||||||||||
U.S. treasury obligations | |||||||||||||||
Total securities owned — trading | |||||||||||||||
Other assets | |||||||||||||||
Total assets at fair value | $ | $ | $ | $ | |||||||||||
Liabilities | |||||||||||||||
Securities sold, but not yet purchased: | |||||||||||||||
Equity securities | $ | $ | $ | $ | |||||||||||
Debt securities | |||||||||||||||
Total securities sold, but not yet purchased | |||||||||||||||
Accounts payable and accrued liabilities | |||||||||||||||
Total liabilities at fair value | $ | $ | $ | $ |
September 30, 2020 | December 31, 2019 | ||||||
Amortized cost | $ | $ | |||||
Gross unrealized gain | |||||||
Fair value | $ | $ |
Within one year | After one but within five years | After five but within ten years | Total | ||||||||||||
U.S. government notes — at amortized cost | $ | $ | $ | $ | |||||||||||
U.S. government notes — at fair value | $ | $ | $ | $ |
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) |
Weighted-Average Life Remaining (in years) | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | ||||||||||
Definite-lived intangible assets: | |||||||||||||
Advisor and financial institution relationships | $ | $ | ( | ) | $ | ||||||||
Product sponsor relationships | ( | ) | |||||||||||
Client relationships | ( | ) | |||||||||||
Technology | ( | ) | |||||||||||
Trade names | ( | ) | |||||||||||
Total definite-lived intangible assets | $ | $ | ( | ) | $ | ||||||||
Indefinite-lived intangible assets: | |||||||||||||
Trademark and trade name | |||||||||||||
Total intangible assets | $ |
Weighted-Average Life Remaining (in years) | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | ||||||||||
Definite-lived intangible assets: | |||||||||||||
Advisor and financial institution relationships | $ | $ | ( | ) | $ | ||||||||
Product sponsor relationships | ( | ) | |||||||||||
Client relationships | ( | ) | |||||||||||
Technology | ( | ) | |||||||||||
Trade names | ( | ) | |||||||||||
Total definite-lived intangible assets | $ | $ | ( | ) | $ | ||||||||
Indefinite-lived intangible assets: | |||||||||||||
Trademark and trade name | |||||||||||||
Total intangible assets | $ |
2020 - remainder | $ | ||
2021 | |||
2022 | |||
2023 | |||
2024 | |||
Thereafter | |||
Total | $ |
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) |
September 30, 2020 | December 31, 2019 | |||||||||||||||||||
Long-Term Borrowings | Balance | Applicable Margin | Interest Rate | Balance | Applicable Margin | Interest rate | Maturity | |||||||||||||
Senior Secured Term Loan B(1) | $ | LIBOR+175 bps | % | $ | LIBOR+175 bps | % | 11/12/2026 | |||||||||||||
Senior Unsecured Notes(1)(2) | Fixed Rate | % | Fixed Rate | % | 9/15/2025 | |||||||||||||||
Senior Unsecured Notes(1)(3) | Fixed Rate | % | Fixed Rate | % | 11/15/2027 | |||||||||||||||
Total long-term borrowings | ||||||||||||||||||||
Plus: Unamortized Premium | ||||||||||||||||||||
Less: Unamortized Debt Issuance Cost | ( | ) | ( | ) | ||||||||||||||||
Net Carrying Value | $ | $ | ||||||||||||||||||
Other Borrowings | ||||||||||||||||||||
Revolving Credit Facility(4) | $ | ABR+25bps | % | $ | ABR+25bps | % | 11/12/2024 | |||||||||||||
Broker-Dealer Revolving Credit Facility | FFR+125bps | % | FFR+125bps | % | 7/31/2024 | |||||||||||||||
Total borrowings | $ | $ |
(1) | No leverage or interest coverage maintenance covenants. |
(2) | The 2025 Notes were issued in two separate transactions; $ |
(3) | The 2027 Notes were issued in November 2019 at par. |
(4) | The alternate base rate (ABR) was the PRIME rate, and reflects the interest rate incurred on the senior secured revolving credit facility on the outstanding balance as of December 31, 2019. |
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) |
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Operating lease cost | $ | $ | $ | $ | |||||||||||
Finance lease cost: | |||||||||||||||
Amortization of right-of-use assets | $ | $ | $ | $ | |||||||||||
Interest on lease liabilities | |||||||||||||||
Total finance lease cost | $ | $ | $ | $ |
Nine Months Ended September 30, | |||||||
2020 | 2019 | ||||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||||
Operating cash flows from operating leases | $ | $ | |||||
Operating cash flows from finance leases | $ | $ | |||||
Financing cash flows from finance leases | $ | $ |
September 30, 2020 | December 31, 2019 | ||||
Weighted-average remaining lease term (years): | |||||
Finance leases | |||||
Operating leases | |||||
Weighted-average discount rate: | |||||
Finance leases | % | % | |||
Operating leases | % | % |
Operating Leases | Finance Leases | ||||||
2020 - remainder | $ | $ | |||||
2021 | |||||||
2022 | |||||||
2023 | |||||||
2024 | |||||||
Thereafter | |||||||
Total lease payments | |||||||
Less imputed interest | |||||||
Total | $ | $ |
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) |
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) |
2020 | 2019 | ||||||||||||||
Dividend per Share | Total Cash Dividend | Dividend per Share | Total Cash Dividend | ||||||||||||
First quarter | $ | $ | $ | $ | |||||||||||
Second quarter | $ | $ | $ | $ | |||||||||||
Third quarter | $ | $ | $ | $ |
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) |
Number of Shares | Weighted- Average Exercise Price | Weighted-Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value (In thousands) | ||||||||||
Outstanding — December 31, 2019 | $ | ||||||||||||
Granted | $ | ||||||||||||
Exercised | ( | ) | $ | ||||||||||
Forfeited and Expired | ( | ) | $ | ||||||||||
Outstanding — September 30, 2020 | $ | $ | |||||||||||
Exercisable — September 30, 2020 | $ | $ | |||||||||||
Exercisable and expected to vest — September 30, 2020 | $ | $ |
Outstanding | Exercisable | |||||||||||||||
Range of Exercise Prices | Number of Shares | Weighted- Average Exercise Price | Weighted-Average Remaining Life (Years) | Number of Shares | Weighted- Average Exercise Price | |||||||||||
$19.85 - $25.00 | $ | $ | ||||||||||||||
$25.01 - $35.00 | $ | $ | ||||||||||||||
$35.01 - $45.00 | $ | $ | ||||||||||||||
$45.01 - $65.00 | $ | $ | ||||||||||||||
$65.01 - $75.00 | $ | $ | ||||||||||||||
$75.01 - $80.00 | $ | $ | ||||||||||||||
$ | $ |
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) |
Restricted Stock Awards | Stock Units | |||||||||||||
Number of Shares | Weighted-Average Grant-Date Fair Value | Number of Units | Weighted-Average Grant-Date Fair Value | |||||||||||
Outstanding — December 31, 2019 | $ | $ | ||||||||||||
Granted | $ | $ | ||||||||||||
Vested | ( | ) | $ | ( | ) | $ | ||||||||
Forfeited | $ | ( | ) | $ | ||||||||||
Nonvested — September 30, 2020 | $ | (1) | $ | |||||||||||
Expected to vest — September 30, 2020 | $ | $ |
(1) | Includes |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Basic weighted-average number of shares outstanding | |||||||||||||||
Dilutive common share equivalents | |||||||||||||||
Diluted weighted-average number of shares outstanding | |||||||||||||||
Basic earnings per share | $ | $ | $ | $ | |||||||||||
Diluted earnings per share | $ | $ | $ | $ |
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) |
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) |
Outstanding Balance at September 30, 2020 | Annual Impact of an Interest Rate Increase of | |||||||||||||||||||
10 Basis | 25 Basis | 50 Basis | 100 Basis | |||||||||||||||||
Senior Secured Credit Facility | Points | Points | Points | Points | ||||||||||||||||
Term Loan B | $ | 1,061,975 | $ | 1,058 | $ | 2,645 | $ | 5,290 | $ | 10,580 |
• | Employees contracting COVID-19, including unavailability of key personnel necessary to conduct our business operations |
• | A prolonged downturn in equity and other financial markets, which would adversely affect our advisory, asset-based and trailing commission revenues |
• | A sustained low interest rate environment, which would reduce revenues from our client cash programs included in asset-based revenue |
• | Reductions in our service levels or operating effectiveness as a substantial majority of our employees are working remotely in response to the pandemic |
• | Failure of our information technology systems, which could result in interruptions or errors in performing securities clearing and custody functions, as a result of extraordinary trading volumes, malware, ransomware or malicious cyber activity |
• | Disruptions in technology, processing or support functions as our outsourced service providers or other vendors, including off-shore providers, experience disruptions in their business operations |
• | Reduction in our ability to recruit advisors or otherwise execute our growth plans due to travel restrictions, limitations on interpersonal contact and challenging macro economic conditions |
• | Closure of our offices or the offices of our advisors |
3.1 | |||
3.2 | |||
3.3 | |||
3.4 | |||
31.1 | |||
31.2 | |||
32.1 | |||
32.2 | |||
101.SCH | Inline XBRL Taxonomy Extension Schema | ||
101.CAL | Inline XBRL Taxonomy Extension Calculation | ||
101.LAB | Inline XBRL Taxonomy Extension Label | ||
101.PRE | Inline XBRL Taxonomy Extension Presentation | ||
101.DEF | Inline XBRL Taxonomy Extension Definition | ||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
* | Filed herewith. | |
** | Furnished herewith. |
LPL Financial Holdings Inc. | |||
Date: | November 3, 2020 | By: | /s/ DAN H. ARNOLD |
Dan H. Arnold | |||
President and Chief Executive Officer | |||
Date: | November 3, 2020 | By: | /s/ MATTHEW J. AUDETTE |
Matthew J. Audette | |||
Chief Financial Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of LPL Financial Holdings Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Dan H. Arnold | |||
Dan H. Arnold | |||
President and Chief Executive Officer (principal executive officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of LPL Financial Holdings Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Matthew J. Audette | |||
Matthew J. Audette | |||
Chief Financial Officer (principal financial officer) |
1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Dan H. Arnold | |||
Dan H. Arnold | |||
President and Chief Executive Officer |
1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Matthew J. Audette | |||
Matthew J. Audette | |||
Chief Financial Officer |
Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
REVENUES: | ||||
Commission | $ 472,643 | $ 474,993 | $ 1,403,540 | $ 1,415,487 |
Advisory | 586,941 | 514,363 | 1,689,338 | 1,449,610 |
Asset-based | 253,551 | 292,140 | 786,124 | 877,054 |
Transaction and fee | 119,747 | 121,222 | 376,321 | 362,037 |
Interest income, net of interest expense | 6,623 | 11,531 | 22,705 | 35,542 |
Other | 20,796 | 1,276 | 12,329 | 37,231 |
Total net revenues | 1,460,301 | 1,415,525 | 4,290,357 | 4,176,961 |
EXPENSES: | ||||
Commission and advisory | 936,766 | 856,635 | 2,667,408 | 2,494,355 |
Compensation and benefits | 151,271 | 138,300 | 441,393 | 407,000 |
Promotional | 57,970 | 61,715 | 159,908 | 154,487 |
Depreciation and amortization | 27,548 | 24,062 | 81,082 | 70,116 |
Amortization of intangible assets | 16,829 | 16,286 | 50,088 | 48,703 |
Occupancy and equipment | 41,874 | 34,417 | 124,486 | 100,843 |
Professional services | 12,301 | 17,666 | 40,526 | 56,115 |
Brokerage, clearing and exchange | 17,834 | 16,380 | 53,423 | 48,518 |
Communications and data processing | 12,547 | 12,535 | 37,743 | 37,394 |
Other | 24,852 | 27,599 | 73,274 | 83,977 |
Total operating expenses | 1,299,792 | 1,205,595 | 3,729,331 | 3,501,508 |
Non-operating interest expense and other | 25,179 | 31,944 | 80,786 | 98,617 |
INCOME BEFORE PROVISION FOR INCOME TAXES | 135,330 | 177,986 | 480,240 | 576,836 |
PROVISION FOR INCOME TAXES | 31,541 | 46,272 | 119,148 | 143,632 |
NET INCOME | $ 103,789 | $ 131,714 | $ 361,092 | $ 433,204 |
EARNINGS PER SHARE (Note 13) | ||||
Earnings per share, basic | $ 1.31 | $ 1.61 | $ 4.56 | $ 5.20 |
Earnings per share, diluted | $ 1.29 | $ 1.57 | $ 4.48 | $ 5.07 |
Weighted-average shares outstanding, basic | 79,176 | 81,833 | 79,207 | 83,315 |
Weighted-average shares outstanding, diluted | 80,550 | 83,844 | 80,612 | 85,421 |
Condensed Consolidated Statements of Financial Condition (Unaudited) (Parentheticals) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
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Accumulated depreciation and amortization, Fixed assets | $ 467,659 | $ 388,355 |
Accumulated amortization, Intangible assets | $ 594,741 | $ 544,653 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 600,000,000 | 600,000,000 |
Common stock, shares issued | 127,409,741 | 126,494,028 |
Treasury stock, shares | 48,134,535 | 46,259,989 |
Receivables from clients [Member] | ||
Allowances on receivables | $ 399 | $ 115 |
Receivables from others [Member] | ||
Allowances on receivables | 3,246 | 10,292 |
Advisor Loans [Member] | ||
Allowances on receivables | $ 6,324 | $ 3,974 |
Condensed Consolidated Statements of Cash Flows (Unaudited) cash, cash equivalent and restricted cash reconciliation - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
Dec. 31, 2018 |
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Supplemental Cash Flow Elements [Abstract] | ||||
Cash and cash equivalents | $ 800,799 | $ 590,209 | $ 929,536 | |
Cash segregated under federal and other regulations | 667,121 | 822,697 | 526,741 | |
Restricted cash | 75,295 | 58,872 | 52,406 | |
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows | $ 1,543,215 | $ 1,471,778 | $ 1,508,683 | $ 1,562,119 |
Organization and Description of the Company |
9 Months Ended |
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Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Description of the Company | Organization and Description of the Company LPL Financial Holdings Inc. (“LPLFH”), a Delaware holding corporation, together with its consolidated subsidiaries (collectively, the “Company”), provides an integrated platform of brokerage and investment advisory services to independent financial advisors and financial advisors at financial institutions (collectively, “advisors”) in the United States. Through its custody and clearing platform, using both proprietary and third-party technology, the Company provides access to diversified financial products and services, enabling its advisors to offer independent financial advice and brokerage services to retail investors (their “clients”). Description of Subsidiaries LPL Holdings, Inc. (“LPLH”), a Massachusetts holding corporation, owns 100% of the issued and outstanding common stock or other ownership interest in each of LPL Financial LLC (“LPL Financial”), AW Subsidiary, Inc., LPL Employee Services, LLC, Fortigent Holdings Company, Inc. and LPL Insurance Associates, Inc. (“LPLIA”), as well as a captive insurance subsidiary (the “Captive Insurance Subsidiary”) that underwrites insurance for various legal and regulatory risks of the Company. LPLH is also the majority stockholder in PTC Holdings, Inc. (“PTCH”), and owns 100% of the issued and outstanding voting common stock. Each member of PTCH’s board of directors meets the direct equity ownership interest requirements that are required by the Office of the Comptroller of the Currency. LPL Financial, with primary offices in San Diego, California; Fort Mill, South Carolina; and Boston, Massachusetts, is a clearing broker-dealer and an investment adviser that principally transacts business as an agent for its advisors and financial 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. Fortigent Holdings Company, Inc. and its subsidiaries provide solutions and consulting services to registered investment advisers (“RIAs”), banks, and trust companies serving high-net-worth clients. LPLIA operates as an insurance brokerage general agency that offers life and disability insurance products and services for LPL Financial advisors. AW Subsidiary, Inc. is a holding company for AdvisoryWorld, which 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. PTCH is a holding company for The Private Trust Company, N.A. (“PTC”). PTC is chartered as a non-depository limited purpose national bank, providing a wide range of trust, investment management oversight, and custodial services for estates and families. PTC also provides Individual Retirement Account (“IRA”) custodial services for LPL Financial. LPL Employee Services, LLC is a holding company for Allen & Company of Florida, LLC (“Allen & Company”), an RIA.
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Summary of Significant Accounting Policies |
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The unaudited 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, intangible assets, allowance for doubtful accounts, share-based compensation, accruals for liabilities, income taxes, revenue and expense accruals, and other matters that affect the consolidated financial statements and related disclosures. The unaudited condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to present fairly the results 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 consolidated financial statements. The unaudited condensed consolidated financial statements include the accounts of LPLFH and its subsidiaries. Intercompany transactions and balances have been eliminated. The unaudited condensed consolidated financial statements do not include all information and notes necessary for a complete presentation of results of income, comprehensive income, financial position, and cash flows in conformity with GAAP. Accordingly, these 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, 2019, contained in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”). See below for significant accounting polices updated on January 1, 2020. A summary of other significant accounting policies are included in Note 2. Summary of Significant Accounting Policies, in the Company’s audited consolidated financial statements and the related notes for the year ended December 31, 2019. Receivables from and Payables to Clients Receivables from clients include amounts due on cash and margin transactions. The Company extends credit to clients of its advisors to finance their purchases of securities on margin and receives income from interest charged on such extensions of credit. Payables to clients represent credit balances in client accounts arising from deposits of funds, proceeds from sales of securities, and dividend and interest payments received on securities held in client accounts at LPL Financial. The Company pays interest on certain client payable balances. Receivables from clients are generally fully secured by securities held in the clients’ accounts. To the extent that margin loans and other receivables from clients are not fully collateralized by client securities, management establishes an allowance that it believes is sufficient to cover any probable losses. When establishing this allowance, management considers a number of factors, including its ability to collect from the client or the client’s advisor and the Company’s historical experience in collecting on such transactions. The following schedule reflects the Company’s activity in providing for an allowance for uncollectible amounts due from clients (in thousands):
Advisor Loans The Company periodically extends credit to its advisors in the form of recruiting loans, commission advances and other loans. The decision to extend credit to an advisor is generally based on the advisor’s credit history and their ability to generate future commissions. Loans made in connection with recruiting can be either repayable or forgivable over terms generally up to ten years provided that the advisor remains licensed through LPL Financial. Forgivable loans are not repaid in cash and are amortized over the term of the loan. If an advisor terminates their arrangement with the Company prior to the loan maturity date, the remaining balance becomes repayable immediately. An allowance for uncollectible amounts is recorded at the inception of repayable loans and upon advisor termination for forgivable loans using estimates and assumptions based on historical lifetime loss experience and expectations of future loss rates based on current facts. Advisor repayable loans totaled $120.0 million and advisor forgivable loans that have become repayable upon advisor termination totaled $2.4 million as of September 30, 2020. Included in the table below is a $1.2 million allowance for advisor forgivable loans that have become repayable. The following schedule reflects the Company’s activity in providing for an allowance for uncollectible amounts for advisor loans (in thousands):
Receivables from Others Receivables from others primarily consist of accrued fees from product sponsors and amounts due from advisors. An allowance for uncollectible amounts is recorded at inception using estimates and assumptions based on historical experience, current facts and other factors. Management monitors the adequacy of these estimates through periodic evaluations against actual trends experienced. The following schedule reflects the Company’s activity in providing for an allowance for uncollectible amounts due from others (in thousands):
Fair Value of Financial Instruments The Company’s financial assets and liabilities are carried at fair value or at amounts that, because of their short-term nature, approximate current fair value, with the exception of its held-to-maturity securities and indebtedness, which are carried at amortized cost. The Company measures the implied fair value of its debt instruments using trading levels obtained from a third-party service provider. Accordingly, the debt instruments qualify as Level 2 fair value measurements. See Note 5. Fair Value Measurements, for additional information regarding the Company’s fair value measurements. As of September 30, 2020, the carrying amount and fair value of the Company’s indebtedness was approximately $2,362.0 million and $2,381.0 million, respectively. As of December 31, 2019, the carrying amount and fair value was approximately $2,415.0 million and $2,476.0 million, respectively. Recently Issued Accounting Pronouncements There are no recently issued accounting pronouncements that would materially impact the Company’s consolidated financial statements and related disclosures. Recently Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. ASU 2016-13 also requires additional disclosures regarding significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. The Company adopted the provisions of this guidance on January 1, 2020 using the modified retrospective method for all financial assets measured at amortized cost and recognized a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Results for reporting periods beginning after January 1, 2020 are presented under Topic 326, while prior period amounts continue to be reported in accordance with previously applicable GAAP. The adoption had no material impact on the Company’s recognition of credit losses. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 removes or modifies certain current disclosures, and requires additional disclosures. The changes are meant to provide more relevant information regarding valuation techniques and inputs used to arrive at measures of fair value, uncertainty in the fair value measurements, and how changes in fair value measurements impact an entity’s performance and cash flows. Certain disclosures in ASU 2018-13 will need to be applied on a retrospective basis and others on a prospective basis. The Company adopted the provisions of this guidance on January 1, 2020. The adoption had no material impact on the Company’s related disclosures. In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Topic 350): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the accounting for costs to implement a cloud computing arrangement that is a service with the guidance on capitalizing costs for developing or obtaining internal-use software. The Company prospectively adopted the provisions of this guidance on January 1, 2020. The adoption had no material impact on the Company’s unaudited condensed consolidated financial statements.
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Revenue |
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Revenues | Revenues Revenues are recognized when control of the promised services is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. Revenues are analyzed to determine whether the Company is the principal (i.e., reports revenues on a gross basis) or agent (i.e., reports revenues on a net basis) in the contract. Principal or agent designations depend primarily on the control an entity has over the product or service before control is transferred to a customer. The indicators of which party exercises control include primary responsibility over performance obligations, inventory risk before the good or service is transferred and discretion in establishing the price. Commission Revenue Commission revenue represents sales commissions generated by advisors for their clients’ purchases and sales of securities on exchanges and over-the-counter, as well as purchases of other investment products. The Company views the selling, distribution and marketing, or any combination thereof, of investment products to such clients as a single performance obligation to the product sponsors. The Company is the principal for commission revenue, as it is responsible for the execution of the clients’ purchases and sales, and maintains relationships with the product sponsors. Advisors assist the Company in performing its obligations. Accordingly, total commission revenues are reported on a gross basis. The following table presents total commission revenue disaggregated by investment product category (in thousands):
The Company generates two types of commission revenue: sales-based commission revenue that is recognized at the point of sale on the trade date and trailing commission revenue that is recognized over time as earned. Sales-based commission revenue varies by investment product and is based on a percentage of an investment product’s current market value at the time of purchase. Trailing commission revenue is generally based on a percentage of the current market value of clients’ investment holdings in trail-eligible assets, and is recognized over the period during which services, such as ongoing support, are performed. As trailing commission revenue is based on the market value of clients’ investment holdings, the consideration is variable and an estimate of the variable consideration is constrained due to dependence on unpredictable market impacts. The constraint is removed once the investment holdings value can be determined. The following table presents sales-based and trailing commission revenues disaggregated by product category (in thousands):
Advisory Revenue Advisory revenue represents fees charged to advisors’ clients’ accounts on the Company’s corporate advisory platform. The Company provides ongoing investment advice and acts as a custodian, providing brokerage and execution services on transactions, and performs administrative services for these accounts. This series of performance obligations transfers control of the services to the client over time as the services are performed. This revenue is recognized ratably over time to match the continued delivery of the performance obligations to the client over the life of the contract. The advisory revenue generated from the Company’s corporate advisory platform is based on a percentage of the market value of the eligible assets in the clients’ advisory accounts. As such, the consideration for this revenue is variable and an estimate of the variable consideration is constrained due to dependence on unpredictable market impacts on client portfolio values. The constraint is removed once the portfolio value can be determined. The Company provides advisory services to clients on its corporate advisory platform through the advisor. The Company is the principal in these arrangements and recognizes advisory revenue on a gross basis, as the Company is responsible for satisfying the performance obligations and has control over determining the fees. Asset-Based Revenue Asset-based revenue consists of fees from the Company’s client cash programs, which consist of fees from its money market programs and insured cash sweep vehicles, sponsorship programs, and recordkeeping. Client Cash Revenue Client cash revenues are generated based on advisors’ clients’ cash balances in insured sweep accounts and money market programs at various banks. The Company receives fees based on account type and invested balances for administration and recordkeeping. These fees are paid and recognized over time. Sponsorship Programs The Company receives fees from product sponsors, primarily mutual fund and annuity companies, for marketing support and sales force education and training efforts. Compensation for these performance obligations is either a fixed fee, a percentage of the average annual amount of product sponsor assets held in advisors’ clients’ accounts, a percentage of new sales or some combination. As the value of product sponsor assets held in advisors’ clients’ accounts is susceptible to unpredictable market changes, this revenue includes variable consideration and is constrained until the date that the fees are determinable. Recordkeeping The Company generates revenue from fees it collects for providing recordkeeping, account maintenance, reporting and other related services to product sponsors. This includes revenue from omnibus processing in which the Company establishes and maintains sub-account records for its clients to reflect the purchase, exchange and redemption of mutual fund shares, and consolidates clients’ trades within a mutual fund. Omnibus processing fees are paid to the Company by the mutual fund or its affiliates and are based on the value of mutual fund assets in accounts for which the Company provides omnibus processing services and the number of accounts in which the related mutual fund positions are held. Recordkeeping revenue also includes revenues from networking recordkeeping services. Networking revenues on brokerage assets are correlated to the number of positions or value of assets that the Company administers and are paid by mutual fund and annuity product manufacturers. These recordkeeping revenues are recognized over time as the Company fulfills its performance obligations. As recordkeeping fees are susceptible to unpredictable market changes that influence market value and fund positions, these revenues include variable consideration and are constrained until the date that the fees are determinable. Depending on the contract, the Company is either principal or agent for recordkeeping revenue. In instances in which the Company is providing services to financial product manufacturers on behalf of third parties and does not have ultimate control of the service before transfer to the customer, the Company is considered to be an agent and reports revenues on a net basis. In other cases, where the Company uses a sub-contractor to provide services and is responsible for unperformed services, the Company is considered principal and reports revenues on a gross basis. The following table sets forth asset-based revenue at a disaggregated level (in thousands):
Transaction and Fee Revenue Transaction revenue primarily includes fees the Company charges to advisors and their clients for executing certain transactions in brokerage and fee-based advisory accounts. Transaction revenue is recognized at the point-in-time that a transaction is executed, which is generally the trade date. Fee revenue may be generated from advisors or their clients. Fee revenues primarily include IRA custodian fees, contract and licensing fees, and other client account fees. In addition, the Company hosts certain advisor conferences that serve as training, education, sales and marketing events, for which the Company collects a fee for attendance. Fee revenue is recognized when the Company satisfies its performance obligations. Recognition varies from point-in-time to over time depending on whether the service is provided once at an identifiable point-in-time or if the service is provided continually over the contract life. The following table sets forth transaction and fee revenue disaggregated by recognition pattern (in thousands):
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The Company is the principal and recognizes transaction and fee revenue on a gross basis as it is primarily responsible for delivering the respective services being provided, which is demonstrated by the Company’s ability to control the fee amounts charged to customers. Interest Income, Net of Interest Expense The Company earns interest income from client margin accounts and cash equivalents, less interest expense on related transactions. This revenue is not generated from contracts with customers. Interest expense incurred in connection with cash equivalents and client margin balances is completely offset by revenue on related transactions; therefore, the Company considers such interest to be an operating expense. Interest expense from operations for the three and nine months ended September 30, 2020 and 2019 was not material. Other Revenue Other revenue primarily includes unrealized gains and losses on assets held by the Company for its advisor non-qualified deferred compensation plan and model research portfolios, marketing allowances received from certain financial product manufacturers, primarily those who offer alternative investments, such as non-traded real estate investment trusts and business development companies, and other miscellaneous revenues. These revenues are not generated from contracts with customers. Arrangements with Multiple Performance Obligations The Company’s contracts with customers may include multiple performance obligations. Contracts with customers that include multiple performance obligations have performance obligations that follow the same revenue recognition pattern and are recorded in the same financial statement line item. 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. The increase in the unearned revenue balance for the nine months ended September 30, 2020 is primarily driven by cash payments received or due in advance of satisfying the Company’s performance obligations, offset by $82.4 million of revenues recognized that were included in the unearned revenue balance as of December 31, 2019. The Company receives cash revenues for advisory services not yet performed and conferences not yet held. 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.
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Acquisitions Acquisitions |
9 Months Ended |
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Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions On August 1, 2019, the Company acquired all of the outstanding equity interests of Allen & Company. Under the transaction structure, Allen & Company advisors and staff became employees of the Company, and Allen & Company will maintain its operations and brand. The Company paid approximately $24.9 million at closing and also agreed to a potential contingent payment of up to $10.0 million, payable approximately six months after the closing date based on the percentage of assets retained by Allen & Company advisors. In February 2020, the Company paid the full $10.0 million, which had previously been recorded as an obligation within accounts payable and accrued liabilities. On August 18, 2020, the Company paid a combined $18.4 million to acquire certain assets from E.K. Riley Investments, LLC and Lucia Securities, LLC, two unrelated broker-dealers and RIAs. The assets included the firms’ business relationships with their advisors. Both transactions have the potential for future contingent payments.
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | 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 nine months ended September 30, 2020. 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 September 30, 2020 and December 31, 2019, 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 include money market funds, which are short term in nature with readily determinable values derived from active markets. Securities Owned 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. Examples of these securities include money market funds, U.S. treasury obligations, mutual funds, certificates of deposit, and equity and debt securities. 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 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 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 September 30, 2020, 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 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 and auction rate notes, 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. Accounts Payable and Accrued Liabilities — The Company’s accounts payable and accrued liabilities include contingent consideration liabilities that are measured using Level 3 inputs. Level 3 Recurring Fair Value Measurements The Company determines the fair value for its contingent consideration obligations using a scenario based approach whereby the Company assesses the expected retention percentage of the acquired assets under management. The contingent payment is estimated by applying a discount rate to the expected payment to calculate the fair value as of the valuation date. The Company’s management evaluates the underlying projections and other related factors used in determining fair value each period and makes updates when there have been significant changes in management’s expectations. The following table summarizes the Company’s financial assets and financial liabilities measured at fair value on a recurring basis at September 30, 2020 (in thousands):
The following table summarizes the Company’s financial assets and financial liabilities measured at fair value on a recurring basis at December 31, 2019 (in thousands):
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Held-to-Maturity Securities |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Held-to-Maturity Securities | Held-to-Maturity Securities The Company holds certain investments in securities, primarily U.S. government notes, which are recorded at amortized cost because the Company has both the intent and the ability to hold these investments to maturity. Interest income is accrued as earned. Premiums and discounts are amortized using a method that approximates the effective yield method over the term of the security and are recorded as an adjustment to the investment yield. The amortized cost, gross unrealized gain and fair value of held-to-maturity securities were as follows (in thousands):
At September 30, 2020, the held-to-maturity securities were scheduled to mature as follows (in thousands):
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Goodwill and Other Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets During the three months ended September 30, 2020, the Company recorded $18.9 million in intangible assets in connection with the asset acquisitions of E.K Riley and Lucia Securities. There have been no changes to goodwill since December 31, 2019. The components of intangible assets were as follows at September 30, 2020 (dollars in thousands):
The components of intangible assets were as follows at December 31, 2019 (dollars in thousands):
Total amortization expense of intangible assets was $16.8 million and $16.3 million for the three months ended September 30, 2020 and 2019, respectively, and $50.1 million and $48.7 million for the nine months ended September 30, 2020 and 2019, respectively. Future amortization expense is estimated as follows (in thousands):
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Borrowings |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings | Borrowings The Company’s outstanding borrowings were as follows (dollars in thousands):
On November 12, 2019, LPLFH and LPLH entered into a fourth amendment agreement (the “Amendment”) to the Company’s amended and restated credit agreement (“Credit Agreement”), and repriced its senior secured Term Loan B facility (“Term Loan B”), increased the size of its senior secured revolving credit facility from $500.0 million to $750.0 million, extended the maturity dates applicable to its Term Loan B and its senior secured revolving credit facility, and made certain other changes to its credit agreement. Additionally, LPLH raised $400.0 million in aggregate principal amount of 4.625% senior unsecured notes which were issued at par (“2027 Notes”). The proceeds from the 2027 Notes were used to pay down the Term Loan B principal balance to $1,070.0 million. In connection with the execution of the Amendment, the Company incurred $13.5 million in costs which are capitalized as debt issuance costs in the consolidated statements of financial condition and accelerated the recognition of $3.2 million of unamortized debt issuance costs as a loss on extinguishment of debt in the consolidated statements of income. The Credit Agreement subjects the Company to certain financial and non-financial covenants. As of September 30, 2020, the Company was in compliance with such covenants. Issuance of 4.625% Senior Notes due 2027 The 2027 Notes are unsecured obligations, governed by an indenture, that will mature on November 15, 2027, and bear interest at the rate of 4.625% per year, with interest payable semi-annually, beginning on May 15, 2020. The Company may redeem all or part of the 2027 Notes at any time prior to November 15, 2022 (subject to a customary “equity claw” redemption right) at 100% of the principal amount redeemed plus a “make-whole” premium. Thereafter, the Company may redeem all or part of the 2027 Notes at annually declining redemption premiums until November 15, 2024, at and after which date the redemption price will be equal to 100% of the principal amount redeemed plus any accrued and unpaid interest thereon. Issuance of 5.75% Senior Notes due 2025 LPLH issued $500.0 million aggregate principal amount of 5.75% senior notes on March 10, 2017 (the “Original Notes”) and $400.0 million aggregate principal amount of 5.75% senior notes on September 21, 2017 (together with the Original Notes, the “2025 Notes”). The 2025 Notes are unsecured obligations, governed by an indenture, that will mature on September 15, 2025, and bear interest at the rate of 5.75% per year, with interest payable semi-annually, beginning September 15, 2017. The Company may redeem all or part of the 2025 Notes at any time prior to March 15, 2020 (subject to a customary “equity claw” redemption right) at 100% of the principal amount redeemed plus a “make-whole” premium. Thereafter the Company may redeem all or part of the 2025 Notes at annually declining redemption premiums until March 15, 2023, at and after which date the redemption price will be equal to 100% of the principal amount redeemed. Term Loan B and Revolving Credit Facility Borrowings under the Term Loan B facility bear interest at a rate per annum of 175 basis points over the Eurodollar Rate or 75 basis points over the base rate (as defined in the Credit Agreement), and have no leverage or interest coverage maintenance covenants. Borrowings under the revolving credit facility bear interest at a rate per annum ranging from 125 to 175 basis points over the Eurodollar Rate or 25 to 75 basis points over the base rate, depending on the Consolidated Secured Debt to Consolidated EBITDA Ratio (as defined in the Credit Agreement). The Eurodollar Rate option is the one-, two-, three-, or six-month LIBOR rate, as selected by LPLH, or, with the approval of the applicable lenders, twelve-month LIBOR rate or the LIBOR rate for another period acceptable to the Administrative Agent (including a shorter period). The LIBOR rate, on which the Eurodollar Rate is based, is expected to be discontinued by December 31, 2021. The Credit Agreement permits LPLH to agree with the administrative agent for the Credit Agreement on a replacement benchmark rate subject to certain conditions (including that a majority of the lenders do not object to such replacement rate within a specified period of time following notice thereof from the administrative agent). The Company is required to make quarterly payments on the Term Loan B facility equal to 0.25% of the aggregate principal amount of the loans under the Term Loan B facility. Broker-Dealer Revolving Credit Facility On July 31, 2019, LPL Financial, the Company’s broker-dealer subsidiary, entered into a committed, unsecured revolving credit facility that matures on July 31, 2024 and allows for a maximum borrowing of up to $300.0 million (the “LPL Financial Credit Facility”). LPL Financial incurred approximately $1.5 million in debt issuance costs. Borrowings under the LPL Financial Credit Facility bear interest at a rate per annum ranging from 112.5 to 137.5 basis points over the Federal Funds Rate or Eurodollar Rate, depending on the Parent Leverage Ratio (each as defined in the credit agreement related to the LPL Financial Credit Facility). The credit agreement related to the LPL Financial Credit Facility subjects LPL Financial to certain financial and non-financial covenants. LPL Financial was in compliance with such covenants as of September 30, 2020. Bank Loans Payable The Company maintained four uncommitted lines of credit as of September 30, 2020. Two of the lines have unspecified limits, which are primarily dependent on the Company’s ability to provide sufficient collateral. The other two lines have a total limit of $150.0 million, one of which allows for collateralized borrowings while the other allows for uncollateralized borrowings. There were no balances outstanding as of September 30, 2020 or December 31, 2019. Letters of Credit As of September 30, 2020, the Company had $0.2 million of irrevocable letters of credit, with an applicable interest rate margin of 1.25%, which were supported by the credit facility.
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Leases | Leases 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 2 years to 16 years, some of which include options to extend the lease for up to 20 years. For leases with renewal options, the lease term is extended to reflect renewal options the Company is reasonably certain to exercise. Operating lease assets and operating lease liabilities are recognized based on the present value of the future lease payments over the lease term at the commencement date. As most of the Company’s leases do not provide an implicit rate, the Company estimates its incremental borrowing rate based on information available at the commencement date in determining the present value of future payments. Lease expense for net present value of payments is recognized on a straight-line basis over the lease term. Finance lease assets are included in fixed assets in the unaudited condensed consolidated statements of financial condition and at September 30, 2020 were $103.5 million. The components of lease expense were as follows (in thousands):
Supplemental cash flow information related to leases was as follows (in thousands):
Supplemental weighted-average information related to leases was as follows:
Maturities of lease liabilities as of September 30, 2020 were as follows (in thousands):
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Finance Leases | Leases 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 2 years to 16 years, some of which include options to extend the lease for up to 20 years. For leases with renewal options, the lease term is extended to reflect renewal options the Company is reasonably certain to exercise. Operating lease assets and operating lease liabilities are recognized based on the present value of the future lease payments over the lease term at the commencement date. As most of the Company’s leases do not provide an implicit rate, the Company estimates its incremental borrowing rate based on information available at the commencement date in determining the present value of future payments. Lease expense for net present value of payments is recognized on a straight-line basis over the lease term. Finance lease assets are included in fixed assets in the unaudited condensed consolidated statements of financial condition and at September 30, 2020 were $103.5 million. The components of lease expense were as follows (in thousands):
Supplemental cash flow information related to leases was as follows (in thousands):
Supplemental weighted-average information related to leases was as follows:
Maturities of lease liabilities as of September 30, 2020 were as follows (in thousands):
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Commitments and Contingencies |
9 Months Ended |
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Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 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 its advisors, primarily to newly recruited advisors 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 but not limited to the advisor joining LPL Financial. LPL Financial had no significant unfunded loan commitments at September 30, 2020. 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 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; potential opportunities for settlement and the status of any settlement discussions; as well as the potential for insurance coverage and indemnification, if available. The Company monitors these factors and assumptions for new developments and re-assesses the likelihood that a loss 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. On May 1, 2018 the Company agreed to a settlement structure with the North American Securities Administrators Association that related to the Company’s historical compliance with certain state “blue sky” laws and resulted in aggregate fines of approximately $26.4 million, all of which were covered by the Captive Insurance Subsidiary’s loss reserves. As part of the settlement structure, the Company engaged independent third party consultants to conduct a historical review of securities transactions and an operational review of the Company’s systems for complying with blue sky securities registration requirements, each of which has been completed. The Company also agreed to offer customers remediation in the form of reimbursement for any actual losses, plus interest. As of the date of this Quarterly Report on Form 10-Q, customer remediation is substantially complete and the cost is not expected to be material. 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 the 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 other actuarial assumptions. 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. As of September 30, 2020, these self-insurance liabilities are included in accounts payable and accrued liabilities in the unaudited condensed consolidated statements of financial condition. Self-insurance related charges are included in other expenses in the unaudited condensed consolidated statements of income for the three and nine months ended September 30, 2020. Other Commitments As of September 30, 2020, the Company had approximately $366.4 million of client margin loans that were collateralized with securities having a fair value of approximately $513.0 million that it can repledge, loan or sell. Of these securities, approximately $63.2 million were client-owned securities pledged to the Options Clearing Corporation as collateral to secure client obligations related to options positions. As of September 30, 2020, there were no restrictions that materially limited the Company’s ability to repledge, loan or sell the remaining $449.8 million of client collateral. Securities owned, trading on the unaudited condensed consolidated statements of financial condition includes $4.5 million and $5.5 million pledged to the Options Clearing Corporation at September 30, 2020 and December 31, 2019, respectively, and $15.0 million pledged to the National Securities Clearing Corporation at both September 30, 2020 and December 31, 2019.
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Stockholders' Equity |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note Disclosure [Text Block] | Stockholders’ Equity Dividends The payment, timing, and amount of any dividends are subject to approval by the Company’s board of directors (the “Board of Directors”) as well as certain limits under the Credit Agreement and indentures. Cash dividends per share of common stock and total cash dividends paid on a quarterly basis were as follows (in millions, except per share data):
Share Repurchases The Company engages in share repurchase programs, which are approved by the Board of Directors, pursuant to which the Company may repurchase its issued and outstanding shares of common stock from time to time. Repurchased shares are included in treasury stock on the unaudited condensed consolidated statements of financial condition. As of September 30, 2020, the Company was authorized to purchase up to an additional $349.8 million of shares pursuant to share repurchase programs approved by the Board of Directors. During the first quarter of 2020, the Company repurchased 1.8 million shares of common stock at a weighted-average price of $82.91 for a total of $150.0 million. The Company suspended share repurchases in mid-March 2020 in light of the business and financial uncertainties created by the COVID-19 pandemic.
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Share-Based Compensation |
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Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Share-Based Compensation In November 2010, the Company adopted the 2010 Omnibus Equity Incentive Plan (as amended and restated in May 2015, the “2010 Plan”), which provides for the granting of stock options, warrants, restricted stock awards, restricted stock units, deferred stock units, performance stock units, and other equity-based compensation. Since its adoption, awards have been and are only made out of the 2010 Plan. As of September 30, 2020, the 2010 Plan had 20,055,945 shares authorized for grant and 3,500,405 shares remaining available for future issuance. Stock Options and Warrants The following table summarizes the Company’s stock option and warrant activity as of and for the nine months ended September 30, 2020:
The following table summarizes information about outstanding stock options and warrants as of September 30, 2020:
The Company recognized share-based compensation related to the vesting of stock options awarded to employees and officers of $1.0 million and $2.2 million during the three months ended September 30, 2020 and 2019, respectively, and $3.4 million and $7.4 million for the nine months ended September 30, 2020 and 2019, respectively. As of September 30, 2020, total unrecognized compensation cost related to non-vested stock options granted to employees and officers was $3.9 million, which is expected to be recognized over a weighted-average period of 1.23 years. Restricted Stock and Stock Units The following summarizes the Company’s activity in its restricted stock awards and stock units, which include restricted stock units, deferred stock units, and performance stock units, for the nine months ended September 30, 2020:
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The Company grants restricted stock awards and deferred stock units to its directors and restricted stock units and performance stock units to its employees and officers. Restricted stock awards and stock units must vest or are subject to forfeiture; however, restricted stock awards are included in shares outstanding upon grant and have the same dividend and voting rights as the Company’s common stock. The Company recognized $6.0 million and $4.7 million of share-based compensation related to the vesting of these restricted stock awards and stock units during the three months ended September 30, 2020 and 2019, respectively, and $19.0 million and $13.9 million during the nine months ended September 30, 2020 and 2019, respectively. As of September 30, 2020, total unrecognized compensation cost for restricted stock awards and stock units was $38.7 million, which is expected to be recognized over a weighted-average remaining period of 2.06 years. The Company also grants restricted stock units to its advisors and to financial institutions. The Company recognized share-based compensation of $0.4 million and $0.5 million related to the vesting of these awards during the three months ended September 30, 2020 and 2019, respectively, and $1.7 million and $2.3 million during the nine months ended September 30, 2020 and 2019, respectively. As of September 30, 2020, total unrecognized compensation cost for restricted stock units granted to advisors and financial institutions was $5.4 million, which is expected to be recognized over a weighted-average remaining period of 2.36 years.
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Earnings per Share |
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Earnings per Share | Earnings per Share Basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of shares of common stock outstanding during the period. The computation of diluted earnings per share is similar to the computation of basic earnings per share, except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if dilutive potential shares of common stock had been issued. The calculation of basic and diluted earnings per share for the periods noted was as follows (in thousands, except per share data):
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Income Taxes |
9 Months Ended |
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Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s effective income tax rate differs from the federal corporate tax rate of 21.0%, primarily as a result of state taxes, settlement contingencies, tax credits and other permanent differences in tax deductibility of certain expenses. These items resulted in effective tax rates of 23.3% and 26.0% for the three months ended September 30, 2020 and 2019, respectively, and 24.8% and 24.9% for the nine months ended September 30, 2020 and 2019, respectively. 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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Related Party Transactions |
9 Months Ended |
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Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions In the ordinary course of business, the Company has related party transactions with a beneficial owner of more than ten percent of the Company’s outstanding common stock. Additionally, through its subsidiary LPL Financial, the Company provides services and charitable contributions to the LPL Financial Foundation, an organization that provides volunteer and financial support within the Company’s local communities. The Company recognized revenue for services provided to these related parties of $1.2 million during each of the three months ended September 30, 2020 and 2019, and $3.4 million and $3.0 million during the nine months ended September 30, 2020 and 2019, respectively. The Company incurred expenses for the services provided by these related parties of $1.2 million and $0.5 million during the three months ended September 30, 2020 and 2019, respectively, and $2.1 million and $1.3 million during the nine months ended September 30, 2020 and 2019, respectively. As of September 30, 2020 and 2019, receivables from and payables to related parties were not material.
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Net Capital and Regulatory Requirements |
9 Months Ended |
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Sep. 30, 2020 | |
Brokers and Dealers [Abstract] | |
Net Capital and Regulatory Requirements | Net Capital and Regulatory Requirements The Company’s registered broker-dealer, LPL Financial, is subject to the SEC’s Net Capital Rule (Rule 15c3-1 under the Exchange Act), which requires the maintenance of minimum net capital. The net capital rules also provide that the broker-dealer’s capital may not be withdrawn if 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. Net capital and the related net capital requirement may fluctuate on a daily basis. LPL Financial is a clearing broker-dealer and, as of September 30, 2020, had net capital of $129.4 million with a minimum net capital requirement of $10.7 million. 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 September 30, 2020 and December 31, 2019, LPL Financial and PTC met all capital adequacy requirements to which they were subject.
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Financial Instruments with Off-Balance-Sheet Credit Risk and Concentrations of Credit Risk |
9 Months Ended |
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Sep. 30, 2020 | |
Concentration Risk Credit Risk Financial Instruments Off Balance Sheet Risk [Abstract] | |
Financial Instruments with Off-Balance-Sheet Credit Risk and Concentrations of Credit Risk | Financial Instruments with Off-Balance-Sheet Credit Risk and Concentrations of Credit Risk LPL Financial’s client securities activities are transacted on either a cash or margin basis. In margin transactions, LPL Financial extends credit to the advisor’s client, subject to various regulatory and internal margin requirements, collateralized by cash and securities in the client’s account. As clients write options contracts or sell securities short, LPL Financial may incur losses if the clients do not fulfill their obligations and the collateral in the clients’ accounts is not sufficient to fully cover losses that clients may incur from these strategies. To control this risk, LPL Financial monitors margin levels daily and clients are required to deposit additional collateral, or reduce positions, when necessary. LPL Financial is obligated to settle transactions with brokers and other financial institutions even if its advisors’ clients fail to meet their obligation to LPL Financial. Clients are required to complete their transactions on the settlement date, generally two business days after the trade date. If clients do not fulfill their contractual obligations, LPL Financial may incur losses. In addition, the Company occasionally enters into certain types of contracts to fulfill its sale of when, as and if issued securities. When, as and if issued securities have been authorized but are contingent upon the actual issuance of the security. LPL Financial has established procedures to reduce this risk by generally requiring that clients deposit cash or securities into their account prior to placing an order. LPL Financial may at times hold equity securities on both a long and short basis that are recorded on the unaudited condensed consolidated statements of financial condition at market value. 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 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.
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Subsequent Events |
9 Months Ended |
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Sep. 30, 2020 | |
Subsequent Event [Abstract] | |
Subsequent Events [Text Block] | Subsequent Events On October 26, 2020, the Company acquired Blaze Portfolio Systems LLC, a Chicago-based financial technology firm. The Company paid approximately $12 million at closing and agreed to a potential contingent payment of up to $5 million. On October 28, 2020, the Board of Directors declared a cash dividend of $0.25 per share on the Company’s outstanding common stock to be paid on November 30, 2020 to all stockholders of record on November 12, 2020.
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Summary of Significant Accounting Policies (Policies) |
9 Months Ended |
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Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The unaudited 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, intangible assets, allowance for doubtful accounts, share-based compensation, accruals for liabilities, income taxes, revenue and expense accruals, and other matters that affect the consolidated financial statements and related disclosures. The unaudited condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to present fairly the results 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 consolidated financial statements. The unaudited condensed consolidated financial statements include the accounts of LPLFH and its subsidiaries. Intercompany transactions and balances have been eliminated. The unaudited condensed consolidated financial statements do not include all information and notes necessary for a complete presentation of results of income, comprehensive income, financial position, and cash flows in conformity with GAAP. Accordingly, these 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, 2019, contained in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”). See below for significant accounting polices updated on January 1, 2020. A summary of other significant accounting policies are included in Note 2. Summary of Significant Accounting Policies, in the Company’s audited consolidated financial statements and the related notes for the year ended December 31, 2019.
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Receivable From and Payables to Clients | Receivables from and Payables to Clients Receivables from clients include amounts due on cash and margin transactions. The Company extends credit to clients of its advisors to finance their purchases of securities on margin and receives income from interest charged on such extensions of credit. Payables to clients represent credit balances in client accounts arising from deposits of funds, proceeds from sales of securities, and dividend and interest payments received on securities held in client accounts at LPL Financial. The Company pays interest on certain client payable balances. Receivables from clients are generally fully secured by securities held in the clients’ accounts. To the extent that margin loans and other receivables from clients are not fully collateralized by client securities, management establishes an allowance that it believes is sufficient to cover any probable losses. When establishing this allowance, management considers a number of factors, including its ability to collect from the client or the client’s advisor and the Company’s historical experience in collecting on such transactions.
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Advisor Loans | Advisor Loans The Company periodically extends credit to its advisors in the form of recruiting loans, commission advances and other loans. The decision to extend credit to an advisor is generally based on the advisor’s credit history and their ability to generate future commissions. Loans made in connection with recruiting can be either repayable or forgivable over terms generally up to ten years provided that the advisor remains licensed through LPL Financial. Forgivable loans are not repaid in cash and are amortized over the term of the loan. If an advisor terminates their arrangement with the Company prior to the loan maturity date, the remaining balance becomes repayable immediately. An allowance for uncollectible amounts is recorded at the inception of repayable loans and upon advisor termination for forgivable loans using estimates and assumptions based on historical lifetime loss experience and expectations of future loss rates based on current facts. Advisor repayable loans totaled $120.0 million and advisor forgivable loans that have become repayable upon advisor termination totaled $2.4 million as of September 30, 2020. Included in the table below is a $1.2 million allowance for advisor forgivable loans that have become repayable.
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Receivables from Others | Receivables from Others Receivables from others primarily consist of accrued fees from product sponsors and amounts due from advisors. An allowance for uncollectible amounts is recorded at inception using estimates and assumptions based on historical experience, current facts and other factors. Management monitors the adequacy of these estimates through periodic evaluations against actual trends experienced.
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Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s financial assets and liabilities are carried at fair value or at amounts that, because of their short-term nature, approximate current fair value, with the exception of its held-to-maturity securities and indebtedness, which are carried at amortized cost. The Company measures the implied fair value of its debt instruments using trading levels obtained from a third-party service provider. Accordingly, the debt instruments qualify as Level 2 fair value measurements. See Note 5. Fair Value Measurements, for additional information regarding the Company’s fair value measurements. As of September 30, 2020, the carrying amount and fair value of the Company’s indebtedness was approximately $2,362.0 million and $2,381.0 million, respectively. As of December 31, 2019, the carrying amount and fair value was approximately $2,415.0 million and $2,476.0 million, respectively.
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Recently Issued & Adopted Accounting Pronouncements | Recently Issued Accounting Pronouncements There are no recently issued accounting pronouncements that would materially impact the Company’s consolidated financial statements and related disclosures. Recently Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. ASU 2016-13 also requires additional disclosures regarding significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. The Company adopted the provisions of this guidance on January 1, 2020 using the modified retrospective method for all financial assets measured at amortized cost and recognized a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Results for reporting periods beginning after January 1, 2020 are presented under Topic 326, while prior period amounts continue to be reported in accordance with previously applicable GAAP. The adoption had no material impact on the Company’s recognition of credit losses. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 removes or modifies certain current disclosures, and requires additional disclosures. The changes are meant to provide more relevant information regarding valuation techniques and inputs used to arrive at measures of fair value, uncertainty in the fair value measurements, and how changes in fair value measurements impact an entity’s performance and cash flows. Certain disclosures in ASU 2018-13 will need to be applied on a retrospective basis and others on a prospective basis. The Company adopted the provisions of this guidance on January 1, 2020. The adoption had no material impact on the Company’s related disclosures. In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Topic 350): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the accounting for costs to implement a cloud computing arrangement that is a service with the guidance on capitalizing costs for developing or obtaining internal-use software. The Company prospectively adopted the provisions of this guidance on January 1, 2020. The adoption had no material impact on the Company’s unaudited condensed consolidated financial statements.
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Summary of Significant Accounting Policies Summary of Significant Accounting Policies (Tables) |
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||
Receivables from clients [Member] | |||||||||||||||||||||||||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||||||||||
Allowances for uncollectible amounts due from clients/advisor loans/other | The following schedule reflects the Company’s activity in providing for an allowance for uncollectible amounts due from clients (in thousands):
|
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Advisor Loans [Member] | |||||||||||||||||||||||||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||||||||||
Allowances for uncollectible amounts due from clients/advisor loans/other | The following schedule reflects the Company’s activity in providing for an allowance for uncollectible amounts for advisor loans (in thousands):
|
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Receivables from others [Member] | |||||||||||||||||||||||||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||||||||||
Allowances for uncollectible amounts due from clients/advisor loans/other | The following schedule reflects the Company’s activity in providing for an allowance for uncollectible amounts due from others (in thousands):
|
Revenue (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue - Reporting Category [Table Text Block] | The following table presents total commission revenue disaggregated by investment product category (in thousands):
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Disaggregation of Revenue - Reporting Category & Timing of Transfer of Good or Service [Table Text Block] | The following table presents sales-based and trailing commission revenues disaggregated by product category (in thousands):
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Disaggregation of Revenue - Product and Service [Table Text Block] | The following table sets forth asset-based revenue at a disaggregated level (in thousands):
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Disaggregation of Revenue - Timing of Transfer of Good or Service [Table Text Block] | The following table sets forth transaction and fee revenue disaggregated by recognition pattern (in thousands):
_______________________________
(2) Transaction and fee revenue recognized over time includes revenue such as error and omission insurance fees, IRA custodian fees and technology fees.
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Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial assets and financial liabilities measured at fair value on a recurring basis | The following table summarizes the Company’s financial assets and financial liabilities measured at fair value on a recurring basis at September 30, 2020 (in thousands):
The following table summarizes the Company’s financial assets and financial liabilities measured at fair value on a recurring basis at December 31, 2019 (in thousands):
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Held-to-Maturity Securities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of amortized cost, gross unrealized gain (loss), and fair value of securities held-to-maturity | The amortized cost, gross unrealized gain and fair value of held-to-maturity securities were as follows (in thousands):
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Maturities of securities held-to-maturity | At September 30, 2020, the held-to-maturity securities were scheduled to mature as follows (in thousands):
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Goodwill and Other Intangible Assets Goodwill and Other Intangible Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of intangible assets | The components of intangible assets were as follows at September 30, 2020 (dollars in thousands):
The components of intangible assets were as follows at December 31, 2019 (dollars in thousands):
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Amortization expense | Total amortization expense of intangible assets was $16.8 million and $16.3 million for the three months ended September 30, 2020 and 2019, respectively, and $50.1 million and $48.7 million for the nine months ended September 30, 2020 and 2019, respectively. Future amortization expense is estimated as follows (in thousands):
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Outstanding Borrowings (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding borrowings | The Company’s outstanding borrowings were as follows (dollars in thousands):
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Leases (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Lease Expense | The components of lease expense were as follows (in thousands):
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Schedule of Supplemental Cash Flow information related to leases | Supplemental cash flow information related to leases was as follows (in thousands):
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Schedule of Supplemental weighted-average information related to leases | Supplemental weighted-average information related to leases was as follows:
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Schedule of Maturities of Lease Liabilities - Operating Leases | Maturities of lease liabilities as of September 30, 2020 were as follows (in thousands):
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Schedule of Maturities of Lease Liabilities - Finance Leases | Maturities of lease liabilities as of September 30, 2020 were as follows (in thousands):
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Stockholders' Equity (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends Declared [Table Text Block] | Cash dividends per share of common stock and total cash dividends paid on a quarterly basis were as follows (in millions, except per share data):
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Share-Based Compensation (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of stock option and warrant activity | The following table summarizes the Company’s stock option and warrant activity as of and for the nine months ended September 30, 2020:
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Summary of outstanding stock options and warrant information | The following table summarizes information about outstanding stock options and warrants as of September 30, 2020:
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Summary of restricted stock awards and restricted stock units activity | The following summarizes the Company’s activity in its restricted stock awards and stock units, which include restricted stock units, deferred stock units, and performance stock units, for the nine months ended September 30, 2020:
_______________________________ (1) Includes 52,923 vested and undistributed deferred stock units.
|
Earnings per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic and diluted earnings per share computations | The calculation of basic and diluted earnings per share for the periods noted was as follows (in thousands, except per share data):
|
Organization and Description of the Company Consolidation, Parent Ownership Interest (Details) |
9 Months Ended |
---|---|
Sep. 30, 2020 | |
LPL Financial LLC [Member] | |
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |
Ownership Interest Percentage In Subsidiary | 100.00% |
Number of States in which Entity Operates | 50 |
PTC Holdings Inc. [Member] | |
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |
Ownership Interest Percentage In Subsidiary | 100.00% |
Summary of Significant Accounting Policies Receivables From and Payables to Clients (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Provision for bad debts | $ 4,193 | $ 5,723 |
Receivables from clients [Member] | ||
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Beginning balance - January 1 | 115 | |
Provision for bad debts | 284 | |
Charge-offs, net of recoveries | 0 | |
Ending balance | 399 | |
Cumulative Effect, Period of Adoption, Adjustment [Member] | Accounting Standards Update 2016-13 [Member] | Receivables from clients [Member] | ||
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Beginning balance - January 1 | $ 0 |
Summary of Significant Accounting Policies Receivables from Advisor (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Provision for bad debts | $ 4,193 | $ 5,723 |
Advisor Loans Term, Maximum | 10 years | |
Advisor Repayable Loan | $ 120,000 | |
Repayable Advisor Forgivable Loans | 2,400 | |
Allowance for Repayable Advisor Forgivable Loans | (1,200) | |
Advisor Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Beginning balance - January 1 | 3,974 | |
Provision for bad debts | 1,250 | |
Charge-offs, net of recoveries | (5,127) | |
Ending balance | 6,324 | |
Cumulative Effect, Period of Adoption, Adjustment [Member] | Accounting Standards Update 2016-13 [Member] | Advisor Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Beginning balance - January 1 | $ 6,227 |
Summary of Significant Accounting Policies Receivables From Others (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Provision for bad debts | $ 4,193 | $ 5,723 |
Receivables from others [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Beginning balance - January 1 | 10,292 | |
Provision for bad debts | 2,598 | |
Charge-offs, net of recoveries | (13,261) | |
Ending balance | 3,246 | |
Cumulative Effect, Period of Adoption, Adjustment [Member] | Accounting Standards Update 2016-13 [Member] | Receivables from others [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Beginning balance - January 1 | $ 3,617 |
Summary of Significant Accounting Policies Fair Value of Financial Instruments (Details) - USD ($) $ in Millions |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total borrowings | $ 2,362.0 | $ 2,415.0 |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of indebtedness | $ 2,381.0 | $ 2,476.0 |
Revenue Commission Revenue Disaggregated by Product Category (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Disaggregation of Revenue [Line Items] | ||||
Document Fiscal Year Focus | 2020 | |||
Brokerage Commissions Revenue | $ 472,643 | $ 474,993 | $ 1,403,540 | $ 1,415,487 |
Annuities [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Brokerage Commissions Revenue | 250,823 | 252,433 | 714,122 | 756,557 |
Mutual Funds [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Brokerage Commissions Revenue | 146,788 | 148,672 | 436,744 | 438,714 |
Equities [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Brokerage Commissions Revenue | 30,283 | 20,149 | 95,689 | 58,213 |
Fixed Income [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Brokerage Commissions Revenue | 16,731 | 24,950 | 64,319 | 73,749 |
Other [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Brokerage Commissions Revenue | $ 28,018 | $ 28,789 | $ 92,666 | $ 88,254 |
Revenue Asset-based Revenue disaggregated by Product and Service (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Disaggregation of Revenue [Line Items] | ||||
Document Fiscal Year Focus | 2020 | |||
Asset Based Fees | $ 253,551 | $ 292,140 | $ 786,124 | $ 877,054 |
Client Cash Revenue [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Asset Based Fees | 108,705 | 162,517 | 376,369 | 497,471 |
Sponsorship Programs [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Asset Based Fees | 70,641 | 62,861 | 198,975 | 187,417 |
Recordkeeping [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Asset Based Fees | $ 74,205 | $ 66,762 | $ 210,780 | $ 192,166 |
Revenue Transaction and Fee Revenue Disaggregated by Timing of Transfer of Good or Service (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Disaggregation of Revenue [Line Items] | ||||
Document Fiscal Year Focus | 2020 | |||
Transaction And Other Fees | $ 119,747 | $ 121,222 | $ 376,321 | $ 362,037 |
Point-in-time [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Transaction And Other Fees | 52,444 | 57,038 | 170,388 | 163,934 |
Over time [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Transaction And Other Fees | $ 67,303 | $ 64,184 | $ 205,933 | $ 198,103 |
Revenue Unearned Revenue Recognized (Details) $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2020
USD ($)
| |
Unearned Revenue [Abstract] | |
Deferred Revenue, Revenue Recognized | $ 82.4 |
Acquisitions (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Aug. 18, 2020 |
Aug. 01, 2019 |
Sep. 30, 2020 |
Mar. 31, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
Jan. 31, 2020 |
|
Business Acquisition [Line Items] | ||||||||
Payments to Acquire Businesses, Net of Cash Acquired | $ 18,899 | $ 24,884 | ||||||
Payment for Contingent Consideration Liability, Financing Activities | $ 10,000 | $ 0 | ||||||
Allen & Company of Florida LLC [Domain] | ||||||||
Business Acquisition [Line Items] | ||||||||
Business Acquisition, Effective Date of Acquisition | Aug. 01, 2019 | |||||||
Payments to Acquire Businesses, Net of Cash Acquired | $ 24,900 | |||||||
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High | $ 10,000 | |||||||
Payment for Contingent Consideration Liability, Financing Activities | $ 10,000 | |||||||
E.K. Riley Investments, LLC and Lucia Securities, LLC [Domain] | ||||||||
Business Acquisition [Line Items] | ||||||||
Business Acquisition, Effective Date of Acquisition | Aug. 18, 2020 | |||||||
Payments to Acquire Businesses, Net of Cash Acquired | $ 18,400 |
Held-to-Maturity Securities (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Summary of amortized cost, gross unrealized gain (loss) and fair value of securities held-to-maturity | ||
U.S. government notes - at amortized cost, Total | $ 13,058 | $ 11,806 |
U.S. Treasury Securities [Member] | ||
Summary of amortized cost, gross unrealized gain (loss) and fair value of securities held-to-maturity | ||
U.S. government notes - at amortized cost, Total | 13,058 | 11,806 |
Gross unrealized gain | 211 | 83 |
U.S. government notes - at fair value, Total | $ 13,269 | $ 11,889 |
Held-to-Maturity Securities (Details 1) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Maturities of securities held-to-maturity | ||
U.S. government notes - at amortized cost, Total | $ 13,058 | $ 11,806 |
U.S. Treasury Securities [Member] | ||
Maturities of securities held-to-maturity | ||
U.S. government notes - at amortized cost, Within one year | 4,987 | |
U.S. government notes - at amortized cost, After one but within five years | 8,071 | |
U.S. government notes - at amortized cost, After five but within ten years | 0 | |
U.S. government notes - at amortized cost, Total | 13,058 | 11,806 |
U.S. government notes - at fair value, Within one year | 5,050 | |
U.S. government notes - at fair value, After one but within five years | 8,219 | |
U.S. government notes - at fair value, After five but within ten years | 0 | |
U.S. government notes - at fair value, Total | $ 13,269 | $ 11,889 |
Goodwill and Other Intangible Assets Goodwill (Details) $ in Thousands |
Sep. 30, 2020
USD ($)
|
---|---|
Goodwill [Roll Forward] | |
Goodwill, ending balance | $ 1,503,648 |
Goodwill and Other Intangible Assets Goodwill and Other Intangible Assets (Details Textures) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Finite-lived Intangible Assets Acquired | $ 18,900 | |||
Total amortization expense of intangible assets | $ 16,829 | $ 16,286 | $ 50,088 | $ 48,703 |
Goodwill and Other Intangible Assets Intangible Assets (Future Amortization Expense) (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Future amortization expense | ||
Remainder of Fiscal Year | $ 17,551 | |
Due Year One | 68,149 | |
Due Year Two | 67,350 | |
Due Year Three | 63,253 | |
Due Year Four | 62,482 | |
Due after Year Four | 90,823 | |
Net Carrying Value | $ 369,608 | $ 400,019 |
Borrowings Broker-Dealer Revolving Credit Facility (Details) - Revolving Credit Facility [Member] - USD ($) $ in Millions |
9 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2020 |
Dec. 31, 2019 |
Nov. 12, 2019 |
Jul. 31, 2019 |
Sep. 21, 2017 |
|
Line of Credit Facility [Line Items] | |||||
Debt Instrument, Basis Spread on Variable Rate | 0.25% | 0.25% | |||
Line of credit, maximum borrowing capacity | $ 750.0 | $ 500.0 | |||
LPL Financial LLC [Domain] | |||||
Line of Credit Facility [Line Items] | |||||
Debt Instrument, Basis Spread on Variable Rate | 1.25% | 1.25% | |||
Line of credit, maximum borrowing capacity | $ 300.0 | ||||
Debt Issuance Costs, Line of Credit Arrangements, Gross | $ 1.5 | ||||
Minimum [Member] | LPL Financial LLC [Domain] | |||||
Line of Credit Facility [Line Items] | |||||
Debt Instrument, Basis Spread on Variable Rate | 1.125% | ||||
Maximum [Member] | LPL Financial LLC [Domain] | |||||
Line of Credit Facility [Line Items] | |||||
Debt Instrument, Basis Spread on Variable Rate | 1.375% |
Borrowings Line of Credit (Bank Loans Payable Textuals) (Details) $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2020
USD ($)
| |
Line of Credit Facility [Line Items] | |
Total number of uncommitted lines of credit | 4 |
Number of uncommitted lines of credit with an unspecified limit | 2 |
Line of Credit [Member] | |
Line of Credit Facility [Line Items] | |
Line of credit, maximum borrowing capacity | $ 150.0 |
Line of credit, amount outstanding | $ 0.0 |
Borrowings Letters of Credit (Details) - Letter of Credit [Member] $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2020
USD ($)
| |
Line of Credit Facility [Line Items] | |
Letters of Credit Outstanding, Amount | $ 0.2 |
Debt Instrument, Basis Spread on Variable Rate | 1.25% |
Leases Narrative (Details) $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2020
USD ($)
| |
Minimum [Member] | |
Lease Description [Line Items] | |
Remaining lease terms (in years) | 2 years |
Maximum [Member] | |
Lease Description [Line Items] | |
Remaining lease terms (in years) | 16 years |
Options to extend leases (in years) | 20 years |
Fixed Assets | |
Lease Description [Line Items] | |
Finance lease assets | $ 103.5 |
Leases Components of Lease Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Lease Cost | ||||
Operating lease cost | $ 4,681 | $ 4,366 | $ 13,888 | $ 13,219 |
Amortization of right-of-use assets | 1,286 | 1,164 | 3,857 | 3,493 |
Interest on lease liabilities | 2,106 | 2,095 | 6,317 | 6,279 |
Total finance lease cost | $ 3,392 | $ 3,259 | $ 10,174 | $ 9,772 |
Leases Supplemental Cash Flow Information Related to Leases (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Leases [Abstract] | ||
Operating Lease, Payments | $ 16,140 | $ 14,270 |
Finance Lease, Interest Payment on Liability | 6,317 | 6,279 |
Finance Lease, Principal Payments | $ 1,095 | $ 648 |
Leases Supplemental Weighted-Average Information Related to Leases (Details) |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Weighted Average Remaining Lease Term [Abstract] | ||
Finance Lease, Weighted Average Remaining Lease Term | 25 years 7 months 6 days | 26 years 2 months 12 days |
Operating Lease, Weighted Average Remaining Lease Term | 8 years 3 months 18 days | 9 years 1 month 6 days |
Weighted Average Discount Rate [Abstract] | ||
Finance Lease, Weighted Average Discount Rate, Percent | 7.80% | 7.75% |
Operating Lease, Weighted Average Discount Rate, Percent | 7.16% | 7.27% |
Leases Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Operating Leases | ||
Remainder of Fiscal Year | $ 5,228 | |
Due Year One | 21,309 | |
Due Year Two | 21,840 | |
Due Year Three | 21,462 | |
Due Year Four | 21,241 | |
Due after Year Four | 94,566 | |
Total lease payments | 185,646 | |
Less imputed interest | 48,077 | |
Operating lease liabilities | 137,569 | $ 141,900 |
Finance Leases | ||
Remainder of Fiscal Year | 2,181 | |
Due Year One | 9,735 | |
Due Year Two | 8,802 | |
Due Year Three | 8,576 | |
Due Year Four | 8,727 | |
Due after Year Four | 233,639 | |
Total lease payments | 271,660 | |
Less imputed interest | 164,162 | |
Finance lease liabilities | $ 107,498 | $ 108,592 |
Commitments and Contingencies Commitments and Contingencies (Legal) (Details) $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2020
USD ($)
| |
Loss Contingencies [Line Items] | |
Loss Contingency Accrual | $ 26.4 |
Commitments and Contingencies Commitments and Contingencies (Other Commitments) (Details) - USD ($) $ in Millions |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Brokers and Dealers [Abstract] | ||
Collateral securities | $ 366.4 | |
Collateral security (Fair value) | 513.0 | |
Amount pledged with client-owned securities | 63.2 | |
Remaining collateral securities that can be re-pledged, loaned, or sold | 449.8 | |
Options Clearing Corporation [Member] | ||
Security Owned and Pledged as Collateral, Fair Value [Abstract] | ||
Trading securities pledged to clearing organizations | 4.5 | $ 5.5 |
National Securities Clearing Corporation [Member] | ||
Security Owned and Pledged as Collateral, Fair Value [Abstract] | ||
Trading securities pledged to clearing organizations | $ 15.0 | $ 15.0 |
Stockholders' Equity (Dividends Paid) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Sep. 30, 2020 |
Jun. 30, 2020 |
Mar. 31, 2020 |
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Common Stock, Number of Shares, Par Value and Other Disclosures [Abstract] | ||||||||
Common Stock, Dividends, Per Share, Cash Paid | $ 0.25 | $ 0.25 | $ 0.25 | $ 0.25 | $ 0.25 | $ 0.25 | ||
Dividends, Common Stock [Abstract] | ||||||||
Cash dividends on common stock | $ 19,809 | $ 19,700 | $ 19,700 | $ 20,485 | $ 20,800 | $ 21,100 | $ 59,267 | $ 62,391 |
Stockholdes' Equity (Share Repurchases) (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Stockholders' Equity Note [Abstract] | ||||
Amount Remaining | $ 349,800 | |||
Equity, Class of Treasury Stock [Line Items] | ||||
Shares Purchased | 1.8 | |||
Weighted-Average Price Paid Per Share | $ 82.91 | |||
Total Cost | $ 150,000 | $ 130,274 | $ 150,036 | $ 380,341 |
Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Earnings Per Share [Abstract] | ||||
Net income | $ 103,789 | $ 131,714 | $ 361,092 | $ 433,204 |
Basic weighted-average number of shares outstanding | 79,176 | 81,833 | 79,207 | 83,315 |
Dilutive common share equivalents | 1,374 | 2,011 | 1,405 | 2,106 |
Diluted weighted-average number of shares outstanding | 80,550 | 83,844 | 80,612 | 85,421 |
Basic earnings per share | $ 1.31 | $ 1.61 | $ 4.56 | $ 5.20 |
Diluted earnings per share | $ 1.29 | $ 1.57 | $ 4.48 | $ 5.07 |
Earnings per Share (Textuals) (Details) - shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Earnings Per Share [Abstract] | ||||
Antidilutive securities excluded from computation of Earnings per Share amount | 391,011 | 422,680 | 510,774 | 596,354 |
Income Taxes (Details) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Income Tax Disclosure [Abstract] | ||||
Federal statutory income tax rate | 21.00% | |||
Effective income tax rate | 23.30% | 26.00% | 24.80% | 24.90% |
Related Party Transactions (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Related Party Transaction [Line Items] | ||||
Shareholder Percent Ownership in Company | 10.00% | |||
Revenue from related party transactions | $ 1.2 | $ 1.2 | $ 3.4 | $ 3.0 |
Related party transactions expenses | $ 1.2 | $ 0.5 | $ 2.1 | $ 1.3 |
Net Capital and Regulatory Requirements (Details) $ in Millions |
Sep. 30, 2020
USD ($)
|
---|---|
Net capital and net capital requirements for the Company's broker-dealer subsidiaries | |
Broker-Dealer, Net Capital | $ 129.4 |
Broker-Dealer, Minimum Net Capital Required, Broker-Dealer Subsidiary, Aggregate Indebtedness Standard | $ 10.7 |
Subsequent Events Subsequent Events - Dividend Declared (Details) - Subsequent Event [Member] - $ / shares |
Nov. 30, 2020 |
Nov. 12, 2020 |
Oct. 29, 2020 |
---|---|---|---|
Subsequent Event [Line Items] | |||
Dividends Payable, Date Declared | Oct. 28, 2020 | ||
Dividends Payable, Amount Per Share | $ 0.25 | ||
Dividends Payable, Date to be Paid | Nov. 30, 2020 | ||
Dividends Payable, Date of Record | Nov. 12, 2020 |
Subsequent Events Subsequent Events - Business Acquisitions (Details) - USD ($) $ in Thousands |
9 Months Ended | |||
---|---|---|---|---|
Oct. 26, 2020 |
Sep. 30, 2020 |
Sep. 30, 2019 |
Apr. 26, 2023 |
|
Subsequent Event [Line Items] | ||||
Payments to Acquire Businesses, Net of Cash Acquired | $ 18,899 | $ 24,884 | ||
Blaze Portfolio Systems LLC [Member] | Subsequent Event [Member] | ||||
Subsequent Event [Line Items] | ||||
Business Acquisition, Effective Date of Acquisition | Oct. 26, 2020 | |||
Payments to Acquire Businesses, Net of Cash Acquired | $ 12,000 | |||
Forecast [Member] | Blaze Portfolio Systems LLC [Member] | Subsequent Event [Member] | ||||
Subsequent Event [Line Items] | ||||
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High | $ 5,000 |
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