Federated Hermes Q3 EPS Rises to $1.50 as Equity Assets Hit Record

Federated Hermes (FHI ) reported earnings of $1.50 per diluted share for the third quarter of 2026 on 29 octobre 2026, up from $1.34 in the same quarter last year, according to the company’s third-quarter earnings release. Net income was $111.9 million, compared with $104.1 million in the third quarter of 2025.

Total revenue rose 8% to $507.3 million from $469.4 million a year earlier and increased 1% from $502.8 million in the second quarter of 2026. Net investment advisory fees increased 12% year over year to $346.8 million, administrative service fees were $110.5 million and other service fees were $50.0 million, down 3% from a year earlier. Operating income was $153.3 million, up 18% from $129.5 million in the third quarter of 2025 and up 15% from $132.9 million in the prior quarter. Diluted weighted-average shares outstanding were 70,997 thousand, down from 74,057 thousand a year earlier.

Managed Assets and Flows

Total managed assets were $884.4 billion at 30 septembre 2026, up $13.2 billion, or 2%, from $871.2 billion a year earlier and down $27.2 billion, or 3%, from $911.6 billion at 30 juin 2026. Average managed assets for the quarter were $897.7 billion, up $38.2 billion, or 4%, from $859.5 billion in the year-ago quarter and down 1% from $910.0 billion in the second quarter of 2026.

Equity assets were a record $110.5 billion at 30 septembre 2026, up $15.8 billion, or 17%, from $94.7 billion a year earlier and up $0.9 billion from 30 juin 2026. Fixed-income assets were $99.4 billion, down $2.4 billion, or 2%, year over year. Alternative/private markets assets were $21.7 billion, up $2.7 billion, or 14%, from a year earlier and up $0.1 billion from the prior quarter. Money market assets were $649.9 billion, down $27.0 billion, or 4%, from 30 juin 2026, while money market fund assets were $486.3 billion, down 1% year over year.

Equity net sales were positive $1,903 million in the quarter, compared with net redemptions of $130 million in the third quarter of 2025. Fixed-income products recorded net sales of $700 million, down from $1,658 million a year earlier, while alternative/private markets products saw net redemptions of $139 million, compared with net redemptions of $1,621 million. Total long-term asset net sales were $2,424 million, against net redemptions of $140 million a year earlier.

The top-selling equity funds during the quarter on a net basis were the MDT Large Cap Growth Fund, MDT Small Cap Core ETF, MDT All Cap Core Fund, MDT Large Cap Value Fund and U.S. Strategic Dividend ETF. The top-selling fixed-income funds were the Sterling Cash Plus Fund, Municipal Ultrashort Fund, Ultrashort Bond Fund, Total Return Bond ETF and Conservative Municipal Microshort Fund.

“Federated Hermes generated positive net equity sales in the third quarter of 2026, including across our MDT suite of quantitative investment solutions,” said J. Christopher Donahue, president and chief executive officer. Donahue said assets in MDT institutional separate accounts and MDT subadvised accounts, as well as total equity assets, reached record highs, and that alternative/private markets fund assets also reached record highs amid demand for MDT Market Neutral offerings.

Expenses, Dividend and Balance Sheet

During the quarter, Federated Hermes derived 50% of its revenue from long-term assets (32% from equity, 10% from fixed-income and 8% from alternative/private markets and multi-asset), 49% from money market assets and 1% from sources other than managed assets. The company attributed the $37.9 million year-over-year revenue increase primarily to higher average equity assets and the second-quarter 2026 acquisition of FCP Fund Manager, L.P., now operating as Federated Hermes FCP Manager, LLC.

Operating expenses rose $14.0 million, or 4%, year over year, driven by an $8.5 million increase in distribution expenses resulting primarily from higher average money market fund assets and a $7.1 million increase in compensation and related expense primarily due to the FCP acquisition. Sequentially, operating expenses fell $15.9 million, or 4%, as the second quarter included $6.5 million of compensation and $4.6 million of professional service fee expenses related to the acquisition.

Nonoperating income (expenses), net swung to an expense of $1.2 million in the quarter from income of $10.9 million a year earlier, a change the company attributed primarily to a decrease in the market value of investments and a decrease in interest and dividend income.

For the first nine months of 2026, revenue rose 13% to $1,489.1 million, net income was $312.6 million versus $296.3 million, and earnings per share were $4.15 versus $3.75. Dividends declared per share were $1.10, compared with $0.99 in the first nine months of 2025. The company attributed the $171.2 million year-over-year revenue increase for the nine-month period primarily to higher average equity and money market assets and the FCP acquisition.

The board of directors declared a dividend of $0.38 per share, payable 13 novembre 2026 to shareholders of record as of 6 novembre 2026. The declared dividend compares with $0.34 per share in the third quarter of 2025. During the quarter, the company repurchased 992,312 shares of its class B common stock for $57.4 million.

Total assets were $2,467.1 million at 30 septembre 2026, up from $2,229.3 million at 31 décembre 2025. Intangible assets, including goodwill, rose to $1,499.3 million from $1,183.6 million, long-term debt was $348.6 million, and cash and other investments were $580.3 million, down from $724.3 million at the end of 2025.

Federated Hermes will host an earnings conference call at 9 a.m. Eastern on Friday, 30 octobre 2026, with a replay available at approximately 12:30 p.m. Eastern the same day.