Asset Management Business Grows Despite Earnings Decrease

Although Legg Mason's investment advisory and related fees are up 46% from a year ago, the firm today reported a 12% drop in second quarter net earnings from the same period a year ago. Net earnings for the second quarter totaled $35.4 million.

Raymond (Chip) Mason, Legg Mason's CEO, attributed the loss to a 9% drop in commission revenues and a 26% drop off in net interest profits in the firm's brokerage business.

The firm's asset management business proved to be the one bright spot in the second quarter for the firm, with assets under management increasing in the second quarter to $145.6 billion, up 15% from the second quarter of 2000. Assets under management increased 4% from the first quarter, making it the 40th consecutive quarter assets rose, according to the company.

Driving the growth in assets were Western Asset Management, an institutional fixed-income affiliate, Legg Mason's equity funds and Legg Mason Capital Management, the company said.

Investment advisory and related fees from the firm's asset management business increased 8% from the first quarter, representing 49% of the company's total net revenues in the second quarter.

'In asset management, which has been our primary growth business, total assets under management and total asset management fees are again at all time highs, and the trend remains quite positive as we continue to increase our assets across the entire group,' Mason said.

Legg Mason's second quarter net revenues totaled $346.3 million, a 1% increase from the second quarter in 2000.

Mason has hopes the firm's profitability will be improved by the recent acquisitions of Private Capital Management and Royce & Associates.

Legg Mason Asset Management, the firm's institutional money management and mutual fund arm, had $140 billion in assets under management at the end of the first quarter, making it the 35th largest asset management company in the U.S.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.