July 14 (Reuters) - Citigroup Inc reported a 96 percent drop in quarterly earnings after taking a charge of $3.8 billion related to a $7 billion settlement with the U.S. Department of Justice over the sale of shoddy mortgage-based securities.
The settlement figure, announced early on Monday, was more than twice what many analysts expected earlier this year but less than the $12 billion sought by the government in negotiations with the bank.
The bank's second-quarter adjusted net income, which excludes the settlement charge and some changes to the value of the bank's debt, was $3.93 billion, or $1.24 per share, compared with $3.89 billion, or $1.25 per share a year earlier.
But total net income under Generally Accepted Accounting Principles, which includes legal expenses, fell to $181 million, or 3 cents per share, from $4.18 billion, or $1.34 per share, a year earlier. (Reporting by Tanya Agrawal and David Henry; Editing by Ted Kerr)