Thursday, investment manager Federated Investors, Inc. (FII) reported a slight increase in profit for the third quarter on lower expenses, partially offset by decline in revenue.
Federated Investors' profit was slightly up at $56.98 million, compared to $56.21 million in the year-ago quarter. On a per share basis, net income increased to $0.56 from $0.52 in the prior-year period. On average, 13 analysts polled by Thomson Reuters expected earnings of $0.52 for the quarter. Analysts' estimates typically exclude one-time items.
Federated Investors' third quarter revenue was $293.6 million, down from $305.9 million in the year-ago period, primarily due to $36.5 million in fee waivers related to certain money market funds in order to maintain positive or zero net yields. Analysts expected revenues of $302.53 million.
At September 30, 2009, Federated's total managed assets were $392.3 billion, up 14% from $344.0 billion at September 30, 2008. For the quarter, average assets under management was up 22% to $408.1 billion from $335.1 billion in the year-ago period.
"Federated's fluctuating fund sales have increased more than 50 percent from the same time last year," said Christopher Donahue, president and CEO, chief executive officer, Federated Investors.
Federated's fixed-income assets at September 30, 2009, were $32.0 billion, up 41% from $22.7 billion at September 30, 2008. Equity assets were up 8% to $29.1 billion at September 30, 2009 rom $2.6 billion at September 30, 2008.
For the quarter, Federated's net flows into equity funds was $126 million. The company said, net sales was led by Federated Prudent Bear Fund and Federated Market Opportunity Fund, both of which invest in alternative-asset classes, and Federated Kaufmann Small Cap Fund, a growth fund.
At September 30, 2009, money market assets in both funds and separate accounts were up 11% to $318.1 billion from $287.8 billion, while money market mutual fund assets increased 11% to $287.6 billion from $259.2 billion at September 30, 2008.
For the nine-month period, Federated's income from continuing operations declined to $145.39 million or $1.42 per share from $167.24 million or $1.62 per share in the year-ago period. The results include a $20.8 million in non-cash impairment charges recognized primarily in the first quarter of 2009.
The company said it experienced strong net positive flows into its bond funds with $1.8 billion during the third quarter, bringing total bond fund inflows to $5.6 billion so far in 2009, an increase of $4.0 billion over the first nine months of 2008.
Federated declared a quarterly dividend of $0.24 per share, payable on November 13, 2009 to shareholders on record from November 9, 2009. During the third quarter, Federated purchased 470,581 shares of its class B common stock for $12.0 million.
Federated Investors stock closed Thursday's regular trading session at $26.86, up $1.03 or 3.99%, on the NYSE. In the after-hours, the stock further gained $1.14 or 4.24% to trade at $28.00.
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