Saxon Financial Inc. today reported a modest increase in fourth quarter earnings.

The investment management firm said net income in the quarter ended Dec. 31, 2007, was $4.5 million, or 33¢ a share, compared with $3.9 million, or 29¢, in the year ago period.

Revenue was $13.2 million during the quarter, a 2% increase over the fourth quarter of 2006.

For the year, net income reached $17.8 million, an increase of 21% over 2006. Earnings per share were $1.31 compared to $1.08 last year.

Full year 2007 revenue increased 13% totaling $54.9 million, compared to $48.6 million in 2006.

Assets under management (AUM) climbed to $12.9 billion at Dec. 31, 2007, an increase of 3% or $367 million during the year.

AUM was adversely impacted in the fourth quarter by net redemptions in mutual funds as value managers continued to be out of favour in a growth oriented market.

“Saxon’s solid financial performance topped a year in which we extended our reach into key distribution channels with retail product launches and new institutional equity mandates,” said Allan Smith, president and CEO, in a release.

During the year, Toronto-based Saxon extended its reach into the advisor channel with the successful launch of Advisor Series, a (front-load) full trailer fee series designed to pay competitive compensation to full-service advisors and financial planners.