Shares of money manager Legg Mason ( LM) traded more than 4% lower Tuesday, despite the company posting a higher-than-expected quarterly profit amid rising assets under management.

Baltimore-based Legg Mason, which will soon take over Citigroup's ( C) asset management business, said third-quarter net income rose to $121 million, or 99 cents a share, from $91.7 million, or 81 cents a share, a year earlier. The Thomson First Call mean analyst estimate was for earnings of 96 cents a share.

The company accounted for its private client and capital markets businesses as discontinued operations due to their pending sale to Citigroup; Legg Mason's continuing operations consist solely of its asset management business.

Income from continuing operations totaled $92.1 million in the September quarter, up 38% from $66.7 million in the year-ago period, as revenue rose 25% to $466.4 million from $373.6 million a year earlier. Earnings per share from continuing operations grew to 75 cents from 59 cents.

Legg Mason's assets under management increased by $105.6 billion, or 34%, in the last 12 months to a record $416.6 billion, the company said. Net client cash flows during the 12-month period totaled $71.7 billion, or 68% of the increase.

In June, Legg Mason said it would swap its brokerage business and an equity stake for most of Citigroup's asset management arm. The deal, valued around $3.7 billion, is expected to close Dec. 1 and will leave Legg Mason with asset management as its sole business.

"Private client's revenues and pre-tax profit margin were up from both the June and prior year quarters, while capital markets' results were improved over the June quarter but continued lower than a year ago," said Raymond "Chip" Mason, Legg Mason's CEO. "Both businesses, we believe, have been negatively affected by the distractions of their pending sale."

Legg Mason shares recently traded down $4.70, or 4.3%, to $105.

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