U.S. Markets closed

Investors pull cash from T. Rowe Price in 4th qtr

BALTIMORE (AP) -- T. Rowe Price Group on Tuesday said its fourth-quarter earnings rose nearly 23 percent as the investment manager's fee revenue surged. But clients withdrew more cash than they added, and shares of T. Rowe Price fell in morning trading.

The Baltimore-based company posted net income after distribution to restricted stock shares of $229.9 million, or 88 cents per share, for the October through December period. That was up from $187.5 million, or 73 cents per share, in the 2011 period.

The latest quarter's result was a penny per share less than the 89 cents per share, on average, forecast by analysts surveyed by FactSet.

Revenue increased 17 percent to $787.3 million, below analysts' expectations for $799.9 million.

T. Rowe Price's largest revenue source, fees from managing mutual funds and other investments, jumped nearly 19 percent to $677.6 million. Revenue also increased from administrative fees, as well as distribution and servicing fees.

But expenses rose nearly 13 percent to $426.1 million. The biggest expense line, compensation and related costs, was up 15 percent.

Assets under management were $576.8 billion as of Dec. 31, up $87.3 billion from the end of 2011, in part due to market appreciation as stocks gained.

However, investors withdrew a net $4.2 billion during the quarter. It was the first quarter since the third quarter of 2011 that withdrawals exceeded deposits.

Net withdrawals from mutual funds totaled about $400 million during the latest period, as cash pulled from stock and blended asset funds more than offset inflows to bond and money market funds.

A larger amount, $3.8 billion, flowed out of other investment portfolios that T. Rowe Price manages. The company said those net withdrawals were primarily from separate accounts for institutional clients outside the U.S.

Shares of T. Rowe Price slipped 89 cents, to $71.29 in late morning trading, after earlier sinking as low as $68.01. The stock has traded as high as $72.65 and as low as $54.47 over the past 12 months.