LPL Financial Seals Altria Wealth Solutions Acquisition, Names New CEO

LPL Financial Holdings LPLA, along with its entities LPL Financial LLC, recently finalized the acquisition of Altria Wealth Solutions, Inc. (“Altria”). The corporate landscape shifted with the departure of the former president and chief executive officer and the appointment of a fresh CEO.

The Acquisition Saga of LPLA

Altria Wealth Solutions, Inc., rooted in New York, commands a network of nearly 2,400 advisors, catering to about 150 banks and credit unions. It oversees a staggering $100 billion in brokerage and advisory assets, predominantly comprising brokerage accounts.

LPLA unveiled on February 13, 2024, that it anticipated onboarding and integration costs ranging between $300 million and $350 million. Although these upfront expenses may seem daunting, the company foresees a bright financial future, eyeing an annual earnings boost of $140 million from this strategic move.

LPL Financial aims to achieve or surpass an 80% retention target. Altria will flourish as a fully owned portfolio entity through the assimilation of Altria advisors, projected to reach completion by mid-2025.

The acquisition seamlessly aligns with LPL Financial’s vision of empowering independent financial advisors and institutions nationwide by offering robust support and resources. This recent acquisition of Atria Wealth Solutions follows in the footsteps of LPL Financial’s past successful endeavors, including the acquisitions of National Planning Holdings and Waddell & Reed in 2017 and 2021, respectively.

For LPLA, acquisitions represent a fundamental pillar of its expansion strategy. In May, the company took over Crown Capital, and in September, it inked a deal to acquire The Investment Center, Inc., reinforcing its strategy to amplify its advisor network and enrich offerings.

Leadership Transition at LPL Financial

In response to a breach of the company’s commitment to fostering a respectful workplace, LPLA’s board of directors ousted Dan H. Arnold from his position as president and chief executive officer. Arnold, recognizing his missteps, tendered his resignation from the board.

This action followed recommendations from a special committee of directors, backed by an external law firm’s investigation which determined that Arnold’s remarks to employees violated LPLA’s code of conduct.

LPLA has, with immediate effect, designated Rich Steinmeier (currently the firm’s managing director and chief growth officer) as the interim CEO.

James Putnam, chair of LPL Financial’s board of directors, emphasized, “LPL’s Code of Conduct mandates every employee, regardless of their title, to nurture a supportive and professional work environment, demonstrating respect to all, including our stakeholders and the broader community. Mr. Arnold regrettably fell short in meeting these fundamental obligations.”

LPL Financial’s Zacks Rank & Market Performance

Since the onset of the year, LPL Financial’s shares have seen a modest 1% increase relative to the industry’s growth of 17.7%.

Image Source: Zacks Investment Research

Presently, LPLA secures a Zacks Rank #3 (Hold).

Consolidation and M&A Moves in the Financial Sector

This week, Byline Bancorp, Inc. BY sealed a cash and stock merger valued at $41 million with First Security Bancorp, Inc., aiming to fortify its footprint in Chicago.

The amalgamation is poised to establish Byline as Chicago’s leading community bank with assets below $10 billion, loans totaling $7.3 billion, deposits amounting to $7.8 billion, and a network of 45 branches across the expansive Chicago metropolitan area.

In a similar vein, last week, TowneBank TOWN clinched an all-cash acquisition deal worth $120 million for Village Bank and Trust Financial Corp. VBFC.

Forecasts indicate that this transaction could boost TOWN’s 2025 earnings per share by around 6%, assuming successful realization of cost efficiencies on a GAAP basis. Moreover, TOWN envisions an approximate 1% enhancement in common equity tier 1 capital and an 80-basis points refinement in efficiency ratio for the following year.

All in all, the financial sector continues to witness a wave of consolidation and strategic M&A activities, each aimed at reshaping the competitive landscape and enhancing market positions.