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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 _______________________________________________________________________________________
FORM 10-Q
 _______________________________________________________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number 001-14818
 _______________________________________________________________________________________
Federated Hermes, Inc.
(Exact name of registrant as specified in its charter)
 _______________________________________________________________________________________
Pennsylvania 25-1111467
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
1001 Liberty Avenue 15222-3779
Pittsburgh,
Pennsylvania
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) 412-288-1900
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class B common stock, no par valueFHINew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  o.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerx  Accelerated filer
Non-accelerated filer  Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes       No  x
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the last practicable date: As of April 30, 2021, the Registrant had outstanding 9,000 shares of Class A Common Stock and 98,478,017 shares of Class B Common Stock.

Table of Contents
Table of Contents

Item 1.
Item 2.
Item 3.
Item 4.
Part II. Other Information
Item 1.
Item 1A.
Item 2.
Item 5.Other Information
Item 6.


FORWARD-LOOKING STATEMENTS

Certain statements in this report on Form 10-Q constitute forward-looking statements, which involve known and unknown risks, uncertainties, and other factors that could cause the actual results, levels of activity, performance or achievements of Federated Hermes, Inc. and its consolidated subsidiaries, including Hermes Fund Managers Limited (HFML) (collectively, Federated Hermes), or industry results, to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are typically identified by words or phrases such as "trend," "potential," "opportunity," "believe," "expect," "anticipate," "current," "intention," "estimate," "position," "projection," "assume," "continue," "remain," "maintain," "sustain," "seek," "achieve," and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "can," "may," and similar expressions. Among other forward-looking statements, such statements include certain statements relating to, or, as applicable, statements concerning management's assessments, beliefs, expectations, assumptions, judgments, projections or estimates regarding the coronavirus and pandemic, their impact and status, and plans in response, asset flows, levels, values and mix or their impact; business mix; the level, timing, degree and impact of changes in interest rates or gross or net yields; fee rates and recognition; sources and levels of revenues, expenses, gains, losses, income and earnings; the level and impact of reimbursements, rebates or assumptions of fund-related expenses (Consideration Payable to Customers) and fee waivers for competitive reasons such as to maintain certain fund expense ratios, to maintain positive or zero net yields (Voluntary Yield-related Fee Waivers), to meet regulatory requirements or to meet contractual requirements (collectively, Fee Waivers); whether, under what circumstances and the degree to which Fee Waivers will be implemented; whether and when revenue or expense is recognized; whether performance fees or carried interest will be earned or repaid or clawed-back; whether and when capital contributions could be made; the components and level of, and prospect for, distribution-related expenses; guarantee and indemnification obligations; the timing of, and direct or contingent, payment obligations; costs, preliminary valuations, valuation adjustments and purchase price allocations relating to acquisitions; any cost savings resulting from acquisitions; payment obligations pursuant to employment or incentive arrangements; business and market expansion opportunities, including, anticipated, or acceleration of, global growth; interest and principal payments, expenses and repayment obligations; taxes and the impact of tax law changes; borrowing, debt, future cash needs and principal uses of cash, cash flows and liquidity; the ability to raise additional capital; type, classification and consolidation of investments; uses of treasury stock; Federated Hermes' product and market performance and Federated Hermes' performance indicators; investor preferences; product and strategy demand, distribution, development and restructuring initiatives and related planning and timing; the effect, and degree of impact, of changes in customer relationships; legal proceedings; the pace, timing, impact, effects and other consequences of Brexit, financial transaction taxes, and the transition away from the London Inter-Bank Offered Rate (LIBOR), as well as potential, proposed and final laws, regulations and other rules, the reexamination of recently promulgated regulations and rules, potential money market fund reforms and continuing regulatory oversight by United States (U.S.) and foreign regulators and other authorities; the attractiveness and resiliency of money market funds; dedication of resources; the adoption and impact of accounting policies, new accounting pronouncements and accounting treatment determinations; compliance, and related legal, compliance



and other professional services expenses; interest rate, concentration, market, currency and other risks; and various other items set forth under Item 1A - Risk Factors in Federated Hermes' Annual Report on Form 10-K for the year ended December 31, 2020. Among other risks and uncertainties, market conditions can change significantly and impact Federated Hermes' business and results, including by changing Federated Hermes' asset flows, levels, and mix, and business mix, which could cause a decline in revenues and net income, result in impairments and increase the amount of Fee Waivers incurred by Federated Hermes. The obligation to make purchase price payments in connection with acquisitions is subject to certain adjustments and conditions, and the obligation to make contingent payments is based on net revenue levels and will be affected by the achievement of such levels. The obligation to make additional payments pursuant to employment or incentive arrangements can be based on satisfaction of certain conditions set forth in those arrangements. Future cash needs, cash flows and uses of cash will be impacted by a variety of factors, including the number and size of any acquisitions, Federated Hermes' success in developing, structuring and distributing its products and strategies, potential changes in assets under management and/or changes in the terms of distribution and shareholder services contracts with intermediaries who offer Federated Hermes' products to customers, and potential increased legal, compliance and other professional services expenses stemming from additional or modified regulation or the dedication of such resources to other initiatives. Federated Hermes' risks and uncertainties also include liquidity and credit risks in Federated Hermes' money market funds and revenue risk, which will be affected by yield levels in money market fund products, changes in fair values of assets under management, any additional regulatory reforms, investor preferences and confidence, Fee Waivers, and the ability of Federated Hermes to collect fees in connection with the management of such products. Many of these factors could be more likely to occur as a result of continued scrutiny of the mutual fund industry by domestic or foreign regulators, and any disruption in global financial markets. As a result, no assurance can be given as to future results, levels of activity, performance or achievements, and neither Federated Hermes nor any other person assumes responsibility for the accuracy and completeness, or updating, of such statements in the future. For more information on these items and additional risks that could impact the forward-looking statements, see Item 1A - Risk Factors included in Federated Hermes’ Annual Report on Form 10-K for the year ended December 31, 2020.


Table of Contents
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
(dollars in thousands)
(unaudited)
March 31,
2021
December 31,
2020
ASSETS
Current Assets
Cash and Cash Equivalents$222,605 $301,819 
Investments—Consolidated Investment Companies92,798 91,359 
Investments—Affiliates and Other67,292 45,593 
Receivables, net of reserve of $16 and $16, respectively
67,213 64,857 
Receivables—Affiliates32,675 41,107 
Prepaid Expenses27,395 22,130 
Other Current Assets10,334 8,478 
Total Current Assets520,312 575,343 
Long-Term Assets
Goodwill801,500 800,267 
Intangible Assets, net of accumulated amortization of $30,028 and $26,372, respectively
481,536 481,753 
Property and Equipment, net of accumulated depreciation of $109,863 and $106,317, respectively
50,980 52,610 
Right-of-Use Assets, net118,958 122,078 
Other Long-Term Assets36,667 28,788 
Total Long-Term Assets1,489,641 1,485,496 
Total Assets$2,009,953 $2,060,839 
LIABILITIES
Current Liabilities
Accounts Payable and Accrued Expenses$57,679 $61,736 
Accrued Compensation and Benefits74,708 170,646 
Lease Liabilities16,540 15,845 
Income Taxes Payable19,603 1,939 
Other Current Liabilities30,770 15,280 
Total Current Liabilities199,300 265,446 
Long-Term Liabilities
Long-Term Debt70,000 75,000 
Long-Term Deferred Tax Liability, net191,752 187,937 
Long-Term Lease Liabilities117,863 121,922 
Other Long-Term Liabilities30,199 36,550 
Total Long-Term Liabilities409,814 421,409 
Total Liabilities609,114 686,855 
Commitments and Contingencies (Note (15))
TEMPORARY EQUITY
Redeemable Noncontrolling Interest in Subsidiaries245,717 236,987 
PERMANENT EQUITY
Federated Hermes, Inc. Shareholders' Equity
Common Stock:
Class A, No Par Value, 20,000 Shares Authorized, 9,000 Shares Issued and Outstanding
189 189 
Class B, No Par Value, 900,000,000 Shares Authorized, 109,505,456 Shares Issued
427,885 418,669 
Retained Earnings1,062,831 1,027,699 
Treasury Stock, at Cost, 10,966,089 and 10,174,013 Shares Class B Common Stock, respectively
(354,512)(324,731)
Accumulated Other Comprehensive Income (Loss), net of tax18,729 15,171 
Total Permanent Equity1,155,122 1,136,997 
Total Liabilities, Temporary Equity and Permanent Equity$2,009,953 $2,060,839 
(The accompanying notes are an integral part of these Consolidated Financial Statements.)
4


Consolidated Statements of Income
(dollars in thousands, except per share data)
(unaudited)
Three Months Ended
March 31,
 20212020
Revenue
Investment Advisory Fees, net—Affiliates$183,833 $183,238 
Investment Advisory Fees, net—Other63,856 57,422 
Administrative Service Fees, net—Affiliates74,302 72,199 
Other Service Fees, net—Affiliates15,869 41,447 
Other Service Fees, net—Other3,313 4,877 
Total Revenue341,173 359,183 
Operating Expenses
Compensation and Related143,620 115,335 
Distribution44,389 96,160 
Systems and Communications18,594 14,896 
Professional Service Fees14,636 13,268 
Office and Occupancy11,240 11,771 
Advertising and Promotional2,824 4,995 
Travel and Related296 3,159 
Other8,096 6,855 
Total Operating Expenses243,695 266,439 
Operating Income97,478 92,744 
Nonoperating Income (Expenses)
Investment Income, net632 1,389 
Gain (Loss) on Securities, net1,379 (15,840)
Debt Expense(491)(931)
Other, net345 8,345 
Total Nonoperating Income (Expenses), net1,865 (7,037)
Income Before Income Taxes99,343 85,707 
Income Tax Provision24,997 22,442 
Net Income Including the Noncontrolling Interests in Subsidiaries74,346 63,265 
Less: Net Income (Loss) Attributable to the Noncontrolling Interests in Subsidiaries(138)(913)
Net Income$74,484 $64,178 
Amounts Attributable to Federated Hermes, Inc.
Earnings Per Common Share—Basic and Diluted$0.75 $0.63 
Cash Dividends Per Share$0.27 $0.27 
(The accompanying notes are an integral part of these Consolidated Financial Statements.)

5


Consolidated Statements of Comprehensive Income
(dollars in thousands)
(unaudited)
Three Months Ended
March 31,
 20212020
Net Income Including the Noncontrolling Interests in Subsidiaries$74,346 $63,265 
Other Comprehensive Income (Loss), net of tax
Permanent Equity
Foreign Currency Translation Gain (Loss)3,558 (24,859)
Temporary Equity
Foreign Currency Translation Gain (Loss)1,430 (11,454)
Other Comprehensive Income (Loss), net of tax4,988 (36,313)
Comprehensive Income Including the Noncontrolling Interests in Subsidiaries79,334 26,952 
Less: Comprehensive Income (Loss) Attributable to Redeemable Noncontrolling Interest in Subsidiaries1,292 (12,367)
Comprehensive Income Attributable to Federated Hermes, Inc.$78,042 $39,319 
(The accompanying notes are an integral part of these Consolidated Financial Statements.)


6


Consolidated Statements of Changes in Equity
(dollars in thousands)
(unaudited)
 Federated Hermes, Inc. Shareholders' Equity  
 Common
Stock
Retained
Earnings
Treasury
Stock
Accumulated
Other
Comprehensive Income (Loss), net of
tax
Total
Permanent
Equity
Redeemable
Noncontrolling
Interest in
Subsidiaries/
Temporary
Equity
Balance at December 31, 2020$418,858 $1,027,699 $(324,731)$15,171 $1,136,997 $236,987 
Net Income (Loss)74,484 74,484 (138)
Other Comprehensive Income (Loss), net of tax3,558 3,558 1,430 
Subscriptions—Redeemable Noncontrolling Interest Holders25,762 
Consolidation (Deconsolidation)(16,237)
Stock Award Activity9,216 (15,234)15,249 9,231 2,481 
Dividends Declared(26,788)(26,788)
Distributions to Noncontrolling Interest in Subsidiaries(1,898)
Change in Estimated Redemption Value of Redeemable Noncontrolling Interests2,670 2,670 (2,670)
Purchase of Treasury Stock(45,030)(45,030)
Balance at March 31, 2021$428,074 $1,062,831 $(354,512)$18,729 $1,155,122 $245,717 
Balance at December 31, 2019$392,210 $930,351 $(281,032)$(249)$1,041,280 $212,086 
Net Income (Loss)64,178 64,178 (913)
Other Comprehensive Income (Loss), net of tax(24,859)(24,859)(11,454)
Subscriptions—Redeemable Noncontrolling Interest Holders5,577 
Consolidation (Deconsolidation)(4,019)
Stock Award Activity7,467 (16,146)16,146 7,467 2,153 
Dividends Declared(27,304)(27,304)
Distributions to Noncontrolling Interest in Subsidiaries(6,039)
Change in Estimated Redemption Value of Redeemable Noncontrolling Interests(1,870)(1,870)1,870 
Purchase of Treasury Stock(15,959)(15,959)
Balance at March 31, 2020$399,677 $949,209 $(280,845)$(25,108)$1,042,933 $199,261 
(The accompanying notes are an integral part of these Consolidated Financial Statements.)
7


Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)
Three Months Ended
March 31,
20212020
Operating Activities
Net Income Including the Noncontrolling Interests in Subsidiaries$74,346 $63,265 
Adjustments to Reconcile Net Income to Net Cash Provided (Used) by Operating Activities
Amortization of Deferred Sales Commissions237 408 
Depreciation and Other Amortization7,236 6,907 
Share-Based Compensation Expense9,216 7,467 
Subsidiary Share-Based Compensation Expense2,482 2,153 
(Gain) Loss on Disposal of Assets(1,684)100 
Provision (Benefit) for Deferred Income Taxes3,597 2,746 
Consolidation/(Deconsolidation) of Other Entities11,789 0 
Net Unrealized (Gain) Loss on Investments322 15,748 
Net Sales (Purchases) of Investments—Consolidated Investment Companies(51,127)3,492 
Other Changes in Assets and Liabilities:
(Increase) Decrease in Receivables, net6,742 8,687 
(Increase) Decrease in Prepaid Expenses and Other Assets(3,342)(10,369)
Increase (Decrease) in Accounts Payable and Accrued Expenses(101,616)(81,461)
Increase (Decrease) in Other Liabilities11,789 10,108 
Net Cash Provided (Used) by Operating Activities(30,013)29,251 
Investing Activities
Purchases of Investments—Affiliates and Other(1,811)(4,048)
Cash Paid for Business Acquisitions, Net of Cash Acquired0 (4,744)
Proceeds from Redemptions of Investments—Affiliates and Other2,466 2,192 
Cash Paid for Property and Equipment(2,159)(1,557)
Net Cash Provided (Used) by Investing Activities(1,504)(8,157)
Financing Activities
Dividends Paid(26,788)(27,304)
Purchases of Treasury Stock(39,073)(15,000)
Distributions to Noncontrolling Interest in Subsidiaries(1,898)(6,039)
Contributions from Noncontrolling Interest in Subsidiaries25,762 5,577 
Proceeds from Shareholders for Share-Based Compensation15 0 
Proceeds from New Borrowings0 100,000 
Payments on Debt(5,000)(5,000)
Other Financing Activities(2,008)(1,834)
Net Cash Provided (Used) by Financing Activities(48,990)50,400 
Effect of Exchange Rates on Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents1,270 (6,486)
Net Increase (Decrease) in Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents(79,237)65,008 
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Beginning of Period308,635 249,511 
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, End of Period229,398 314,519 
Less: Restricted Cash Recorded in Other Current Assets6,507 5,863 
Less: Restricted Cash and Restricted Cash Equivalents Recorded in Other Long-Term Assets286 307 
Cash and Cash Equivalents$222,605 $308,349 
(The accompanying notes are an integral part of these Consolidated Financial Statements.)
8

Table of Contents
Notes to the Consolidated Financial Statements
(unaudited)

(1) Basis of Presentation
Federated Hermes, Inc. and its consolidated subsidiaries (collectively, Federated Hermes) provide investment advisory, administrative, distribution and other services to various investment products, including sponsored investment companies, collective funds and other funds (Federated Hermes Funds) and Separate Accounts (which include separately managed accounts, institutional accounts, certain sub-advised funds and other managed products) in both domestic and international markets. In addition, Federated Hermes markets and provides stewardship and real estate development services to various domestic and international companies. The interim Consolidated Financial Statements of Federated Hermes included herein have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). In the opinion of management, the financial statements reflect all adjustments that are of a normal recurring nature and necessary for a fair presentation of the results for the interim periods presented.
In preparing the financial statements, management is required to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Actual results may differ from those estimates, and such differences may be material to the Consolidated Financial Statements.
These financial statements should be read in conjunction with Federated Hermes' Annual Report on Form 10-K for the year ended December 31, 2020. Certain items reported in previous periods have been reclassified to conform to the current period's presentation.
(2) Significant Accounting Policies
For a listing of Federated Hermes' significant accounting policies, please refer to Federated Hermes' Annual Report on Form 10-K for the year ended December 31, 2020. The following accounting policy has been updated as a result of newly consolidated variable interest entities (VIEs).
Consolidation of Variable Interest Entities
Federated Hermes has a controlling financial interest in a VIE and is, therefore, deemed to be the primary beneficiary of a VIE if it has (1) the power to direct the activities of a VIE that most significantly impact the VIE's economic performance and (2) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. Financial information for certain entities, whose primary purpose is to collect and distribute carried interest paid by foreign private equity and infrastructure funds, is not available timely and is therefore consolidated on a one quarter lag, adjusted for any known material carried interest revenue and compensation transactions occurring through the balance sheet date.
(3) Business Combinations
HCL Acquisition
On March 5, 2020, Federated Hermes acquired, effective as of March 1, 2020, 100 percent ownership of HGPE Capital Limited (HCL Acquisition) for £15.9 million ($20.4 million). The principal activity of HGPE Capital Limited is that of a holding company for an infrastructure and private equity investment management business. As a result of the acquisition of HGPE Capital Limited, Federated Hermes gained control of Hermes GPE LLP (HGPE) (collectively with HGPE Capital Limited, HCL). The addition of London-based HCL provides the opportunity to further accelerate and broaden Federated Hermes' global growth.
The HCL Acquisition included upfront cash payments that totaled £11.2 million ($14.3 million). The transaction also includes contingent purchase price payments payable through December 2024 that were deposited into escrow. The maximum contingent purchase price payments, recorded in Other Long-Term Liabilities, total £3.5 million ($4.5 million as of March 1, 2020), which represents the payment of certain future carried interest.
Prior to March 1, 2020, Federated Hermes accounted for its partial ownership interest in HGPE as an equity-method investment recorded in Other Long-Term Assets on the Consolidated Balance Sheets. Management used an independent valuation expert to assist in estimating the fair value of this equity interest in HGPE using primarily the discounted cash flow methodology under the income approach. The acquisition-date fair value of this previous equity interest was $34.5 million. In the first quarter 2020, Federated Hermes recognized a gain of $7.5 million as a result of remeasuring the prior equity interest in HGPE held before the
9

Table of Contents
Notes to the Consolidated Financial Statements
(unaudited)
business combination and the consolidation of HGPE. This gain is included in Nonoperating Income (Expenses) - Other, net on the Consolidated Statements of Income.
Federated Hermes performed a valuation of the fair market value of acquired assets and assumed liabilities of the HCL Acquisition. The accounting for this acquisition was finalized in the first quarter 2021. During the first quarter 2021, Federated Hermes recorded adjustments that primarily resulted from the consolidation of certain foreign subsidiaries not previously consolidated. The provisional amounts recognized for certain acquired assets and incurred liabilities were adjusted by $25.8 million and $17.2 million, respectively, with the net offset of $8.6 million recorded to the related redeemable noncontrolling interest in subsidiary. This adjustment reflected facts and circumstances that existed as of the acquisition date. As a result of the consolidation of these subsidiaries, Federated Hermes recorded revenue of $6.9 million offset by $6.9 million of Compensation and Related expense, which represented the income and expense that would have been recorded had these entities been consolidated on March 1, 2020. There was no change to net income or earnings per share for the three-month period ended March 31, 2021 as a result of these adjustments.
The following table summarizes the final purchase price allocation determined as of the purchase date:
(in millions)
Cash and Cash Equivalents $32.7 
Other Current Assets1
11.8 
Goodwill2
19.1 
Intangible Assets3
27.6 
Other Long-Term Assets16.4 
Less: Liabilities Acquired(44.1)
Less: Fair Value of Redeemable Noncontrolling Interest in Subsidiary4
(43.1)
Total Purchase Price Consideration$20.4 
1    Includes $5.0 million of accounts receivable.
2    The goodwill recognized is attributable to enhanced revenue and AUM growth opportunities from future investors and the assembled workforce of HGPE. In this instance, goodwill is not deductible for tax purposes.
3    Includes $20.3 million for rights to manage fund assets for private equity funds with a weighted-average useful life of 9.0 years and $6.9 million for rights to manage fund assets for infrastructure funds with a weighted-average useful life of 11.0 years, all of which are recorded in Intangible Assets, net on the Consolidated Balance Sheets.
4    The fair value of the noncontrolling interest was determined utilizing primarily the discounted cash flow methodology under the income approach.
(4) Revenue from Contracts with Customers
The following table presents Federated Hermes' revenue disaggregated by asset class:
Three Months Ended
March 31,
(in thousands)20212020
Equity$166,357 $137,290 
Money Market80,692 151,420 
Fixed-Income56,777 46,607 
Other1
37,347 23,866 
Total Revenue$341,173 $359,183 
1    Primarily includes Alternative / Private Markets (including but not limited to private equity, real estate and infrastructure), multi-asset and stewardship services revenue.
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Table of Contents
Notes to the Consolidated Financial Statements
(unaudited)
The following table presents Federated Hermes' revenue disaggregated by performance obligation:
Three Months Ended
March 31,
(in thousands)20212020
Asset Management1
$247,689 $240,660 
Administrative Services74,302 72,199 
Distribution2
13,028 38,934 
Other3
6,154 7,390 
Total Revenue$341,173 $359,183 
1    The performance obligation may include administrative, distribution and other services recorded as a single asset management fee under Topic 606, as it is part of a unitary fee arrangement with a single performance obligation.
2    The performance obligation is satisfied at a point in time. A portion of this revenue relates to a performance obligation that has been satisfied in a prior period.
3    Primarily includes shareholder service fees and stewardship services revenue.
The following table presents Federated Hermes' revenue disaggregated by geographical market:
Three Months Ended
March 31,
(in thousands)20212020
Domestic$256,491 $296,362 
Foreign1
84,682 62,821 
Total Revenue$341,173 $359,183 
1    This represents revenue earned by non-U.S. domiciled subsidiaries.
The following table presents Federated Hermes' revenue disaggregated by product type:
Three Months Ended
March 31,
(in thousands)20212020
Federated Hermes Funds$274,005 $296,885 
Separate Accounts63,855 57,421 
Other1
3,313 4,877 
Total Revenue$341,173 $359,183 
1    Primarily includes stewardship services revenue.
For nearly all revenue, Federated Hermes is not required to disclose certain estimates of revenue expected to be recorded in future periods as a result of applying the following exemptions: (1) contract terms are short-term in nature (i.e., expected duration of one year or less due to termination provisions) and (2) the expected variable consideration would be allocated entirely to future service periods.
Federated Hermes expects to recognize revenue in the future related to the unsatisfied portion of the stewardship services and real estate development performance obligations at March 31, 2021. Generally, contracts are billed in arrears on a quarterly basis and have a three year duration, after which the customer can terminate the agreement with notice, generally from three to 12 months. Based on existing contracts and the exchange rates as of March 31, 2021, Federated Hermes may recognize future fixed revenue from these services as presented in the following table:
(in thousands)
Remainder of 2021$9,092 
20224,251 
20232,397 
2024 and Thereafter1,350 
Total Remaining Unsatisfied Performance Obligations$17,090 
11

Table of Contents
Notes to the Consolidated Financial Statements
(unaudited)
(5) Concentration Risk
(a) Revenue Concentration by Asset Class
The following table presents Federated Hermes' revenue concentration by asset class:
Three Months Ended
March 31,
20212020
Equity Assets49 %38 %
Money Market Assets24 %43 %
Fixed-Income Assets16 %13 %
The change in the relative proportion of Federated Hermes' revenue attributable to money market assets for the three months ended March 31, 2021, as compared to the same period in 2020, was primarily the result of an increase in fee waivers. See section entitled Low Short-Term Interest Rates below.
The change in the relative proportion of Federated Hermes' revenue attributable to equity and fixed-income assets for the three months ended March 31, 2021, as compared to the same period in 2020, was primarily the result of decreased money market revenue mentioned above and a higher proportion of average equity and fixed-income assets in 2021.
Low Short-Term Interest Rates
In March 2020, in response to disrupted economic activity as a result of the outbreak of a novel coronavirus (Covid-19, or the Pandemic), the Federal Open Market Committee of the Federal Reserve Board (FOMC) decreased the federal funds target rate range to 0% - 0.25%. The federal funds target rate drives short-term interest rates. As a result of the near-zero interest-rate environment, the gross yield earned by certain money market funds is not sufficient to cover all of the fund's operating expenses. Beginning in the first quarter 2020, Federated Hermes began to waive fees in order for certain money market funds to maintain positive or zero net yields (Voluntary Yield-related Fee Waivers). These Voluntary Yield-related Fee Waivers have been partially offset by related reductions in distribution expense as a result of Federated Hermes' mutual understanding and agreement with third-party intermediaries to share the impact of the Voluntary Yield-related Fee Waivers.
During the three months ended March 31, 2021, Voluntary Yield-related Fee Waivers totaled $83.1 million. These fee waivers were partially offset by related reductions in distribution expenses of $61.4 million, such that the net negative pre-tax impact to Federated Hermes was $21.7 million for the three months ended March 31, 2021. See Management's Discussion and Analysis under the caption Business Developments - Low Short-Term Interest Rates for additional information on management's expectations regarding Voluntary Yield-related Fee Waivers.
(b) Revenue Concentration by Investment Fund Strategy
The following table presents Federated Hermes' revenue concentration by investment fund strategy:
Three Months Ended
March 31,
20212020
Federated Hermes Kaufmann Fund and Federated Hermes Kaufmann Fund II11 %8 %
Federated Hermes Government Obligations Fund7 %12 %
A significant and prolonged decline in the AUM in these funds could have a material adverse effect on Federated Hermes' future revenues and, to a lesser extent, net income, due to a related reduction in distribution expenses associated with these funds.
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Table of Contents
Notes to the Consolidated Financial Statements
(unaudited)
(c) Revenue Concentration by Intermediary
Approximately 3% and 11% of Federated Hermes' total revenue for the three-month periods ended March 31, 2021 and 2020, respectively, was derived from services provided to one intermediary, The Bank of New York Mellon Corporation, including its Pershing subsidiary. The decrease in 2021 as compared to 2020 was primarily due to an increase in Voluntary Yield-related Fee Waivers. Significant negative changes in Voluntary Yield-related Fee Waivers or Federated Hermes' relationship with this intermediary could have a material adverse effect on Federated Hermes' future revenues and, to a lesser extent, net income due to a related reduction in distribution expenses associated with this intermediary.
(6) Consolidation
The Consolidated Financial Statements include the accounts of Federated Hermes, certain Federated Hermes Funds and other entities in which Federated Hermes holds a controlling financial interest. Federated Hermes is involved with various entities in the normal course of business that may be deemed to be voting rights entities (VREs) or VIEs. From time to time, Federated Hermes invests in Federated Hermes Funds for general corporate investment purposes or, in the case of newly launched products, in order to provide investable cash to establish a performance history. Federated Hermes' investment in, and/or receivables from, these Federated Hermes Funds represents its maximum exposure to loss. The assets of each consolidated Federated Hermes Fund are restricted for use by the respective Federated Hermes Fund. Generally, neither creditors of, nor equity investors in, the Federated Hermes Funds have any recourse to Federated Hermes' general credit. Given that the entities consolidated by Federated Hermes generally follow investment company accounting, which prescribes fair-value accounting, a deconsolidation generally does not result in gains or losses for Federated Hermes.
In the ordinary course of business, Federated Hermes may implement fee waivers for various Federated Hermes Funds for competitive reasons (such as to maintain certain fund ratios, yields or Voluntary Yield-related Fee Waivers), to meet regulatory requirements or to meet contractual requirements (collectively, Fee Waivers). For the three months ended March 31, 2021 and 2020, Fee Waivers totaled $201.1 million and $130.5 million, respectively, of which $168.0 million and $100.1 million, respectively, related to money market funds which meet the scope exception of the consolidation guidance.
Like other sponsors of investment companies, Federated Hermes in the ordinary course of business may make capital contributions to certain affiliated money market Federated Hermes Funds in connection with the reorganization of such funds into certain other affiliated money market Federated Hermes Funds or in connection with the liquidation of a money market Federated Hermes Fund. In these instances, such capital contributions typically are intended to either offset realized losses or other permanent impairments to a fund's net asset value (NAV), increase the market-based NAV per share of the fund's portfolio that is being reorganized to equal the market-based NAV per share of the acquiring fund or to bear a portion of expenses relating to a fund liquidation. Under current money market fund regulations and Securities and Exchange Commission (SEC) guidance, Federated Hermes is required to report these types of capital contributions to U.S. money market mutual funds to the SEC as financial support to the investment company that is being reorganized or liquidated. There were no material contributions for the three months ended March 31, 2021 and no contributions for the three months ended March 31, 2020.
In accordance with Federated Hermes' consolidation accounting policy, Federated Hermes first determines whether the entity being evaluated is a VRE or a VIE. Once this determination is made, Federated Hermes proceeds with its evaluation of whether to consolidate the entity. The disclosures below represent the results of such evaluations as of March 31, 2021 and December 31, 2020.
(a) Consolidated Voting Rights Entities
Most of the Federated Hermes Funds meet the definition of a VRE. Federated Hermes consolidates VREs only when it is deemed to have control. Consolidated VREs are reported on Federated Hermes' Consolidated Balance Sheets primarily in Investments—Consolidated Investment Companies and Redeemable Noncontrolling Interest in Subsidiaries.
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Table of Contents
Notes to the Consolidated Financial Statements
(unaudited)
(b) Consolidated Variable Interest Entities
As of each period ended March 31, 2021 and December 31, 2020, Federated Hermes was deemed to be the primary beneficiary of, and therefore consolidated, certain entities as a result of its controlling financial interest. The following table presents the balances related to the consolidated VIEs that were included on the Consolidated Balance Sheets as well as Federated Hermes' net interest in the consolidated VIEs for each period presented.
(in millions)March 31, 2021December 31, 2020
Cash and Cash Equivalents$12.0 $0.2 
Investments—Consolidated Investment Companies12.1 12.1 
Other Assets1
11.3 0.1 
Less: Liabilities11.4 0.1 
Less: Redeemable Noncontrolling Interest in Subsidiaries9.1 0.0 
Federated Hermes' Net Interest in VIEs$14.9 $12.3 
1    Amount at March 31, 2021 primarily consists of long-term assets.
Federated Hermes' net interest in the consolidated VIEs represents the value of Federated Hermes' economic ownership interest in that VIE.
During the first quarter of 2021, as a result of the HCL Acquisition, Federated Hermes consolidated certain VIEs not previously consolidated. See Note (3) for additional information. There was no material impact to the Consolidated Statements of Income as a result of these consolidations. There were no other consolidations or deconsolidations of VIEs during the three months ended March 31, 2021.
(c) Non-Consolidated Variable Interest Entities
Federated Hermes' involvement with certain Federated Hermes Funds that are deemed to be VIEs includes serving as the investment manager, or at times, holding a minority interest or both. Federated Hermes' variable interest is not deemed to absorb losses or receive benefits that could potentially be significant to the VIE. Therefore, Federated Hermes is not the primary beneficiary of these VIEs and has not consolidated these entities.
At March 31, 2021 and December 31, 2020, Federated Hermes' variable interest in non-consolidated VIEs was $97.8 million and $106.0 million, respectively, (primarily recorded in Cash and Cash Equivalents on the Consolidated Balance Sheets) and was entirely related to Federated Hermes Funds. AUM for these non-consolidated Federated Hermes Funds totaled $8.7 billion and $9.1 billion at March 31, 2021 and December 31, 2020, respectively. Of the Receivables—Affiliates at March 31, 2021 and December 31, 2020, $0.5 million and $0.4 million, respectively, related to non-consolidated VIEs and represented Federated Hermes' maximum risk of loss from non-consolidated VIE receivables.
(7) Investments
At March 31, 2021 and December 31, 2020, Federated Hermes held investments in non-consolidated fluctuating-value Federated Hermes Funds of $57.5 million and $36.0 million, respectively, primarily in mutual funds which invest in equity securities. Federated Hermes held investments in Separate Accounts of $9.8 million and $9.6 million at March 31, 2021 and December 31, 2020, respectively, that were included in Investments—Affiliates and Other on the Consolidated Balance Sheets. Federated Hermes' investments held in Separate Accounts as of March 31, 2021 and December 31, 2020, were primarily composed of domestic debt securities ($5.2 million at each period end) and stocks of large U.S. and international companies ($3.3 million and $3.1 million, respectively), at each period end.
Federated Hermes consolidates certain Federated Hermes Funds into its Consolidated Financial Statements as a result of its controlling financial interest in these Federated Hermes Funds (see Note (6)). All investments held by these consolidated Federated Hermes Funds were included in Investments—Consolidated Investment Companies on Federated Hermes' Consolidated Balance Sheets.
The investments held by consolidated Federated Hermes Funds as of March 31, 2021 and December 31, 2020 were primarily composed of domestic and foreign debt securities ($69.5 million and $48.6 million, respectively), stocks of large international and U.S. companies ($8.5 million and $35.2 million, respectively), investments in investment companies ($8.0 million and $1.2
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Table of Contents
Notes to the Consolidated Financial Statements
(unaudited)
million, respectively) and stocks of small and mid-sized U.S. and international companies ($6.9 million and $6.4 million, respectively).
The following table presents gains and losses recognized in Gain (Loss) on Securities, net on the Consolidated Statements of Income in connection with Federated Hermes' investments:
 Three Months Ended
March 31,
(in thousands)20212020
Investments—Consolidated Investment Companies
Net Unrealized Gains (Losses)$(1,903)$(10,352)
Net Realized Gains (Losses)1
1,261 3 
Net Gains (Losses) on Investments—Consolidated Investment Companies(642)(10,349)
Investments—Affiliates and Other
Net Unrealized Gains (Losses)1,581 (5,396)
Net Realized Gains (Losses)1
440 (95)
Net Gains (Losses) on Investments—Affiliates and Other2,021 (5,491)
Gain (Loss) on Securities, net$1,379 $(15,840)
1     Realized gains and losses are computed on a specific-identification basis.
(8) Fair Value Measurements
Fair value is the price that would be received to sell an asset or the price that would be paid to transfer a liability as of the measurement date. A fair-value reporting hierarchy exists for disclosure of fair value measurements based on the observability of the inputs to the valuation of financial assets and liabilities. The levels are:
Level 1 – Quoted prices for identical instruments in active markets. Level 1 assets may include equity and debt securities that are traded in an active exchange market, including shares of mutual funds.
Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 2 assets and liabilities may include debt and equity securities, purchased loans and over-the-counter derivative contracts whose fair value is determined using a pricing model without significant unobservable market data inputs.
Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable in active markets.
NAV Practical Expedient – Investments that calculate NAV per share (or its equivalent) as a practical expedient. These investments have been excluded from the fair value hierarchy.
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Table of Contents
Notes to the Consolidated Financial Statements
(unaudited)
(a) Fair Value Measurements on a Recurring Basis
The following table presents fair value measurements for classes of Federated Hermes' financial assets and liabilities measured at fair value on a recurring basis:
(in thousands)Level 1Level 2Level 3Total
March 31, 2021
Financial Assets
Cash and Cash Equivalents$222,605 $0 $0 $222,605 
Investments—Consolidated Investment Companies15,421 77,377 0 92,798 
Investments—Affiliates and Other61,715 5,254 323 67,292 
Other1
9,272 3,896 0 13,168 
Total Financial Assets$309,013 $86,527 $323 $395,863 
Total Financial Liabilities2
$0 $0 $11,640 $11,640 
December 31, 2020
Financial Assets
Cash and Cash Equivalents$301,819 $0 $0 $301,819 
Investments—Consolidated Investment Companies13,622 77,737 0 91,359 
Investments—Affiliates and Other40,010 5,247 336 45,593 
Other1
9,188 5,143 0 14,331 
Total Financial Assets$364,639 $88,127 $336 $453,102 
Total Financial Liabilities2
$0 $89 $12,896 $12,985 
1    Amounts primarily consist of restricted cash, security deposits and derivative assets.
2    Amounts primarily consist of acquisition-related future contingent consideration liabilities.
The following is a description of the valuation methodologies used for financial assets and liabilities measured at fair value on a recurring basis. Federated Hermes did not hold any nonfinancial assets or liabilities measured at fair value on a recurring basis at March 31, 2021 or December 31, 2020.
Cash and Cash Equivalents
Cash and Cash Equivalents include deposits with banks and investments in money market funds. Investments in money market funds totaled $175.8 million and $244.3 million at March 31, 2021 and December 31, 2020, respectively. Cash investments in publicly available money market funds are valued under the market approach through the use of quoted market prices in an active market, which is the NAV of the funds, and are classified within Level 1 of the valuation hierarchy.
Investments—Consolidated Investment Companies
Investments—Consolidated Investment Companies represent securities held by consolidated Federated Hermes Funds. For publicly traded securities available in an active market, the fair value of these securities is classified as Level 1 when the fair value is based on quoted market prices. The fair value of certain securities held by consolidated Federated Hermes Funds are determined by third-party pricing services which utilize observable market inputs of comparable investments (Level 2).
Investments—Affiliates and Other
Investments—Affiliates and Other primarily represent investments in fluctuating-value Federated Hermes Funds, as well as investments held in Separate Accounts. For investments in fluctuating-value Federated Hermes Funds that are publicly available, the securities are valued under the market approach through the use of quoted market prices available in an active market, which is the NAV of the funds, and are classified within Level 1 of the valuation hierarchy. For publicly traded securities available in an active market, the fair value of these securities is classified as Level 1 when the fair value is based on quoted market prices. The fair value of certain securities are determined by third-party pricing services which utilize observable market inputs of comparable investments (Level 2).
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Notes to the Consolidated Financial Statements
(unaudited)
Acquisition-related future contingent consideration liabilities
From time to time, pursuant to agreements entered into in connection with certain business combinations and asset acquisitions, Federated Hermes may be required to make future consideration payments if certain contingencies are met. In connection with certain business combinations, Federated Hermes records a liability representing the estimated fair value of future consideration payments as of the acquisition date. The liability is subsequently re-measured at fair value on a recurring basis with changes in fair value recorded in earnings. As of March 31, 2021, acquisition-related future consideration liabilities of $11.6 million were primarily related to business combinations made in the first quarter of 2020 and were recorded in Other Current Liabilities ($7.0 million) and Other Long-Term Liabilities ($4.6 million) on the Consolidated Balance Sheets. Management estimated the fair value of future consideration payments based primarily upon expected future cash flows using an income approach valuation methodology with unobservable market data inputs (Level 3).
The following table presents a reconciliation of the beginning and ending balances for Federated Hermes' liability for future consideration payments related to these business combinations/asset acquisitions:
(in thousands)
Balance at December 31, 2020$12,896 
Changes in Fair Value752 
Contingent Consideration Payments(2,008)
Balance at March 31, 2021$11,640 
Investments using Practical Expedients
For investments in mutual funds that are not publicly available but for which the NAV is calculated monthly and for which there are redemption restrictions, the investments are valued using NAV as a practical expedient and are excluded from the fair value hierarchy. As of March 31, 2021 and December 31, 2020, these investments totaled $15.0 million and $6.9 million, respectively, and were recorded in Other Long-Term Assets.
(b) Fair Value Measurements on a Nonrecurring Basis
Federated Hermes did not hold any assets or liabilities measured at fair value on a nonrecurring basis at March 31, 2021.
(c) Fair Value Measurements of Other Financial Instruments
The fair value of Federated Hermes' debt is estimated by management using observable market data (Level 2). Based on this fair value estimate, the carrying value of debt appearing on the Consolidated Balance Sheets approximates fair value.
(9) Derivatives
Hermes Fund Managers Limited (HFML), a British Pound Sterling-denominated majority-owned subsidiary of Federated Hermes, enters into foreign currency forward transactions in order to hedge against foreign exchange rate fluctuations in the U.S. Dollar. None of the forwards have been designated as hedging instruments for accounting purposes. As of March 31, 2021, this subsidiary held foreign currency forward derivative instruments with a combined notional amount of £55.0 million and expiration dates ranging from June 2021 through December 2021. Federated Hermes recorded $3.8 million in Receivables on the Consolidated Balance Sheets, which represented the fair value of these derivative instruments as of March 31, 2021.
As of December 31, 2020, HFML held foreign currency forward derivative instruments with a combined notional amount of £47.3 million and expiration dates ranging from March 2021 through September 2021. Federated Hermes recorded $5.1 million in Receivables on the Consolidated Balance Sheets, which represented the fair value of these derivative instruments as of December 31, 2020.
(10) Intangible Assets, including Goodwill
Intangible Assets, net at March 31, 2021 decreased $0.2 million from December 31, 2020 primarily due to $3.4 million of amortization expense, partially offset by a $2.8 million increase in the value of intangible assets denominated in a foreign currency as a result of foreign exchange rate fluctuations.
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Notes to the Consolidated Financial Statements
(unaudited)
Goodwill at March 31, 2021 increased $1.2 million from December 31, 2020 as a result of foreign exchange rate fluctuations on goodwill denominated in a foreign currency.
(11) Debt
On June 5, 2017, Federated Hermes entered into an unsecured Third Amended and Restated Credit Agreement by and among Federated Hermes, certain of its subsidiaries as guarantors party thereto, a syndicate of ten banks as Lenders party thereto, PNC Bank, National Association as administrative agent, PNC Capital Markets LLC, as sole bookrunner and joint lead arranger, Citigroup Global Markets, Inc., as joint lead arranger, Citibank, N.A. as syndication agent, and TD Bank, N.A. as documentation agent (Credit Agreement). The Credit Agreement consists of a $375 million revolving credit facility with an additional $200 million available via an optional increase (or accordion) feature. The interest on the revolving credit facility is calculated at the monthly London Interbank Offering Rate (LIBOR) plus a spread. The borrowings under the revolving credit facility may include up to $25 million for which interest is calculated at the daily LIBOR plus a spread (Swing Line). On July 1, 2018, Federated Hermes entered into an amendment to the Credit Agreement to add certain definitions and to amend certain negative covenants relating to indebtedness, guarantees, and restrictions on dividends, related to the 2018 acquisition of a controlling interest in HFML (HFML Acquisition). This amendment contains other customary conditions, representations, warranties and covenants.
The Credit Agreement, which expires on June 5, 2022, has no principal payment schedule, but instead requires that any outstanding principal be repaid by the expiration date. Federated Hermes, however, may elect to make discretionary principal payments. During the first three months of 2021, Federated Hermes repaid $5 million to the revolving credit facility. As of March 31, 2021 and December 31, 2020, the amounts outstanding under the revolving credit facility were $70 million and $75 million, respectively, and were recorded as Long-Term Debt on the Consolidated Balance Sheets. The interest rate was 1.238% and 1.277% as of March 31, 2021 and December 31, 2020, respectively, which was calculated at LIBOR plus a spread. The commitment fee under the Credit Agreement currently is 0.125% per annum on the daily unused portion of each Lender's commitment. As of March 31, 2021, Federated Hermes has $305 million available for borrowings under the revolving credit facility and an additional $200 million available via its optional accordion feature.
The Credit Agreement includes representations and warranties, affirmative and negative financial covenants, including an interest coverage ratio covenant and a leverage ratio covenant, reporting requirements and other non-financial covenants. Federated Hermes was in compliance with all covenants at and during the three months ended March 31, 2021. See the Liquidity and Capital Resources section of Management's Discussion and Analysis of Financial Condition and Results of Operations for additional information. The Credit Agreement also has certain stated events of default and cross default provisions which would permit the lenders/counterparties to accelerate the repayment of debt outstanding if not cured within the applicable grace periods. The events of default generally include breaches of contract, failure to make required loan payments, insolvency, cessation of business, notice of lien or assessment, and other proceedings, whether voluntary or involuntary, that would require the repayment of amounts borrowed. The Credit Agreement also requires certain subsidiaries to enter into a Second Amended and Restated Continuing Agreement of Guaranty and Suretyship to guarantee payment of all obligations incurred through the Credit Agreement.
(12) Share-Based Compensation Plans
During the three months ended March 31, 2021, Federated Hermes awarded 712,924 shares of restricted Federated Hermes Class B common stock, nearly all of which was granted in connection with a bonus program in which certain key employees receive a portion of their bonus in the form of restricted stock under Federated Hermes' Stock Incentive Plan. This restricted stock, which was granted on the bonus payment date and issued out of treasury, will generally vest over three years.
During 2020, Federated Hermes awarded 1,134,581 shares of restricted Federated Hermes Class B common stock under its Stock Incentive Plan. Of this amount, 649,581 shares were awarded in connection with the aforementioned bonus program. The remaining shares were awarded to certain key employees and generally vest over ten years.
(13) Equity
In April 2020, the board of directors authorized a share repurchase program with no stated expiration date that allows the buy back of up to 3.5 million shares of Class B common stock. No other program existed as of March 31, 2021. The program authorizes executive management to determine the timing and the amount of shares for each purchase. The repurchased stock is to be held in treasury for employee share-based compensation plans, potential acquisitions and other corporate activities, unless
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Notes to the Consolidated Financial Statements
(unaudited)
Federated Hermes' board of directors subsequently determines to retire the repurchased stock and restore the shares to authorized but unissued status (rather than holding the shares in treasury). During the first three months of 2021, Federated Hermes repurchased approximately 1.5 million shares of its Class B common stock for $45.0 million ($7.1 million of which was accrued in Other Current Liabilities as of March 31, 2021), all of which were repurchased in the open market. At March 31, 2021, approximately 157 thousand shares remained available to be repurchased under this buyback program. See Note (18) to the Consolidated Financial Statements for information regarding a new share repurchase program approved on April 29, 2021.
The following table presents the activity for the Class B common stock and Treasury stock for the three months ended March 31, 2021 and 2020. Class A shares have been excluded as there was no activity during these same periods.
 Three Months Ended
March 31,
20212020
Class B Shares
Beginning Balance99,331,443 101,130,379 
Stock Award Activity 712,924 649,581 
Purchase of Treasury Stock(1,505,000)(714,251)
Ending Balance98,539,367 101,065,709 
Treasury Shares
Beginning Balance10,174,013 8,375,077 
Stock Award Activity (712,924)(649,581)
Purchase of Treasury Stock1,505,000 714,251 
Ending Balance10,966,089 8,439,747 

(14) Earnings Per Share Attributable to Federated Hermes, Inc. Shareholders
The following table sets forth the computation of basic and diluted earnings per share using the two-class method for amounts attributable to Federated Hermes:
 Three Months Ended
March 31,
(in thousands, except per share data)20212020
Numerator
Net Income Attributable to Federated Hermes, Inc.$74,484 $64,178 
Less: Total Net Income Available to Participating Unvested Restricted Shareholders1
(3,008)(2,410)
Total Net Income Attributable to Federated Hermes Common Stock - Basic$71,476 $61,768 
Less: Total Net Income Available to Unvested Restricted Shareholders of a Nonpublic Consolidated Subsidiary(259)(88)
Total Net Income Attributable to Federated Hermes Common Stock - Diluted$71,217 $