Federated Hermes, Inc.’s FHI second-quarter 2026 earnings per share of $1.38 topped the Zacks Consensus Estimate of $1.19. The bottom line grew 19% from the year-ago quarter.
Higher net investment advisory fees, net administrative service fees, and net other service fees, along with record assets under management (AUM), drove the quarterly performance. The acquisition of a majority stake in U.S. real estate manager FCP Fund Manager, L.P. during the quarter enhanced revenues, strengthened FHI's private markets capabilities, and increased alternative assets under management. However, the rise in operating expenses remained a headwind.
Net income was $104.3 million in the second quarter, up 14.6% from the year-ago quarter.
FHI’s Revenues Increase, Expenses Rise
Total revenues increased 18% year over year to $502.8 million. The top line surpassed the Zacks Consensus Estimate by 1.7%. The acquisition of FCP Fund Manager contributed $13.9 million to the company's revenues during the quarter.
Quarterly net investment advisory fees rose 17% year over year to $337.7 million.
Net other service fees grew 54% year over year to $54.9 million. Net administrative service fees rose 8% to $110.1 million.
In the second quarter, Federated Hermes derived 50% of its revenues from money-market assets, 48% from long-term assets (30% from equity, 10% from fixed income, and 8% from alternative/private markets and multi-asset), and 2% from sources other than managed assets.
Total operating expenses increased 20% year over year to $369.9 million. The rise was primarily due to higher distribution, compensation, professional service, and other expenses, including acquisition-related costs associated with the FCP Fund Manager, L.P. transaction.
FHI recorded a net non-operating income of $11.1 million, down 19% year over year, mainly due to lower interest and dividend income.
Federated Hermes’ Balance Sheet Position
As of June 30, 2026, cash and other investments and total long-term debt were $480.7 million and $348.5 million, respectively. Cash and other investments and total long-term debt were $645.4 million and $348.4 million, respectively, as of March 31, 2026.
FHI’s Asset Position Improves
As of June 30, 2026, total managed assets were at a record level of $911.6 billion, up 7.8% year over year.
Money-market assets totaled $676.9 billion, rising 6.7% year over year, while fixed-income assets increased 1.8% to $100.5 billion.
Equity assets of $109.6 billion increased 23.1% from the prior-year quarter, while alternative/private market assets increased 4.4% to $21.6 billion, primarily reflecting $3.2 billion of assets acquired through the FCP transaction.
Average managed assets totaled $910 billion, up 8.7% year over year.
Federated Hermes’ Capital Distribution Update
The company repurchased 1,119,805 shares of its class B common stock in the reported quarter for $58.9 million.
Federated Hermes also declared a quarterly dividend of 38 cents per share, to be paid out on Aug. 14, 2026, to shareholders of record as of Aug. 7, 2026.
Our Viewpoint on FHI
Federated Hermes continues to deliver strong performance, driven by rising AUM and robust revenue growth, supported by higher equity and money market assets. The company has further strengthened its growth prospects by expanding its investment offerings with the launch of two new exchange-traded funds (ETFs) and its first blockchain ecosystem-focused fund, while enhancing its private markets franchise through the FCP acquisition. Although acquisition-related costs and elevated operating expenses may weigh on near-term profitability, healthy asset growth, increasing equity assets, and a diversified product portfolio position FHI well for sustained long-term growth.
Federated Hermes, Inc. Price, Consensus and EPS Surprise
Federated Hermes, Inc. price-consensus-eps-surprise-chart | Federated Hermes, Inc. Quote
Currently, FHI carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performances of Other Asset Managers
SEI Investments Co.’s SEIC second-quarter 2026 adjusted earnings per share of $1.66 surpassed the Zacks Consensus Estimate of $1.45. The bottom line reflected a rise of 38.3% from the prior-year quarter.
SEIC’s results were aided by higher revenues and a rise in AUM. However, higher expenses acted as a spoilsport.
BOK Financial Corporation's BOKF second-quarter 2026 adjusted earnings of $2.59 per share surpassed the Zacks Consensus Estimate of $2.56. The bottom line jumped 18.3% from the prior-year quarter.
BOKF’s results benefited from higher NII and total fees and commissions. An increase in loans was another positive. However, the rise in operating expenses was a major undermining factor.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
