As the Q3 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the custody bank industry, including Federated Hermes (NYSE: FHI) and its peers.

Custody banks safeguard financial assets and provide services like settlement, accounting, and regulatory compliance for institutional investors. Growth opportunities stem from increasing global assets under custody, demand for data analytics, and blockchain technology adoption for settlement efficiency. Challenges include fee pressure from large clients, substantial technology investment requirements, and competition from both traditional players and fintech firms entering the space.

The 16 custody bank stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 5%.

In light of this news, share prices of the companies have held steady as they are up 4.8% on average since the latest earnings results.

Federated Hermes (NYSE: FHI)

With roots dating back to 1955 and a pioneering role in money market funds, Federated Hermes (NYSE: FHI) is an investment management firm that offers a wide range of funds and strategies for institutional and individual investors.

Federated Hermes reported revenues of $469.4 million, up 14.9% year on year. This print exceeded analysts’ expectations by 5.5%. Overall, it was a stunning quarter for the company with a beat of analysts’ EPS and revenue estimates.

"We saw record net sales of equity funds in the third quarter, driven by continued interest in our MDT equity and alternative quantitative investment offerings—a broad suite of quantitative investment solutions that employ a disciplined, bottom-up investment approach that fits a variety of portfolio structures as core or complementary strategies," said J. Christopher Donahue, president and chief executive officer.

Interestingly, the stock is up 11.6% since reporting and currently trades at $52.77.

We think Federated Hermes is a good business, but is it a buy today? Read our full report here, it’s free for active Edge members.

Best Q3: Hamilton Lane (NASDAQ: HLNE)

With over $100 billion in assets under management and supervision, Hamilton Lane (NASDAQ: HLNE) is an investment management firm that specializes in private markets, offering advisory services and fund solutions to institutional and private wealth investors.

Hamilton Lane reported revenues of $190.9 million, up 27.3% year on year, outperforming analysts’ expectations by 12.8%. The business had an incredible quarter with a beat of analysts’ EPS and revenue estimates.

The market seems happy with the results as the stock is up 14.6% since reporting. It currently trades at $131.75.

Is now the time to buy Hamilton Lane? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: P10 (NYSE: PX)

Operating as a bridge between institutional investors and hard-to-access private market opportunities, P10 (NYSE: PX) is an alternative asset management firm that provides access to private equity, venture capital, impact investing, and private credit opportunities in the middle and lower middle markets.

P10 reported revenues of $75.93 million, up 2.3% year on year, falling short of analysts’ expectations by 4.5%. It was a slower quarter as it posted a significant miss of analysts’ EBITDA estimates and a significant miss of analysts’ management fees estimates.

P10 delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 7.1% since the results and currently trades at $9.83.

Read our full analysis of P10’s results here.

BNY (NYSE: BK)

Tracing its roots back to 1784 when it was founded by Alexander Hamilton, BNY (NYSE: BK) is a global financial institution that provides asset servicing, wealth management, and investment services to institutions, corporations, and high-net-worth individuals.

BNY reported revenues of $5.07 billion, up 9.1% year on year. This result beat analysts’ expectations by 2.1%. Overall, it was a strong quarter as it also logged a beat of analysts’ EPS estimates and a decent beat of analysts’ revenue estimates.

The stock is up 4.5% since reporting and currently trades at $114.

Read our full, actionable report on BNY here, it’s free for active Edge members.

T. Rowe Price (NASDAQ: TROW)

Founded in 1937 by Thomas Rowe Price Jr., who pioneered the growth stock investing approach, T. Rowe Price (NASDAQ: TROW) is an investment management firm that offers mutual funds, advisory services, and retirement planning solutions to individuals and institutions.

T. Rowe Price reported revenues of $1.91 billion, up 5% year on year. This number topped analysts’ expectations by 0.6%. It was a strong quarter as it also put up an impressive beat of analysts’ EBITDA estimates and a beat of analysts’ EPS estimates.

The stock is up 1.8% since reporting and currently trades at $103.92.

Read our full, actionable report on T. Rowe Price here, it’s free for active Edge members.

Market Update

Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.

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