Citigroup (C) reported a second quarter net income of  $181 million, or $0.03 cents per diluted share, significantly down compared to a $4.2 billion, or $1.34 per diluted share for the second quarter 2013.

Second-quarter earnings were drastically impacted by a $3.8 billion charge to settle residential mortgage-backed securities and collateralized debt obligations, which consisted of $3.7 billion in legal expenses and a $55 million loan loss reserve build.

However, in total, Citigroup will pay $7 billion, $4.5 billion in cash and $2.5 billion in consumer relief, resolving actual and potential civil claims by the U.S. Department of Justice, several state attorneys general, and the Federal Deposit Insurance Corporation.

"Our businesses showed resilience in the face of an uneven economic environment. During the quarter, we continued to grow loans in our core businesses, reduce operating expenses by simplifying our products and processes and utilize our deferred tax assets,” Michael Corbat, CEO of Citi, said.

“Despite the significant impact of today's settlement on our net income, our capital position strengthened to an estimated Tier 1 Common ratio of 10.6% on a Basel III basis, and our tangible book value increased," Corbat added.

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