Earnings Miss Scrapes Legg

"It was probably one of the more challenging [quarters] we've seen in terms of assets under management," Mason said during the call, noting that it was only the second time in 60 quarters that the company posted a drop in assets under management.

The company announced a 17% increase in its quarterly dividend to 21 cents a share. But despite about $1 billion in cash on the books and the fact that the stock has been dropping, President and Chief Operating Officer James Hirschmann said that Legg Mason has no plans at this time to buy back stock.

He said the company will get around to a buyback, but that "it's just not likely over the next three of four months." He characterized the current environment as a period of stabilization, due in large part to the Citigroup deal.

Legg Mason said that the integration of the Citigroup business is proceeding on schedule and that it began to realize "meaningful" cost savings during the quarter.

"The story [with Citigroup] is just beginning to unfold," Hirschmann said during the conference call. "The road has had bumps in it ... but we've seen no road closures or major potholes to date."

Legg Mason also reiterated its plan to cut its mutual fund lineup to 119 from 166 in order to reduce product overlap caused by the Citigroup acquisition. The company also wants to implement a single corporate structure to streamline fund administration.

Legg Mason's managed investments business now represents approximately 40% of assets under management. Upon completion of the restructuring, its fund lineup will contain four branded U.S. fund families: Legg Mason Funds, Legg Mason Partners Funds, Royce Funds and Western Asset Funds.