Bank of America Corp., the second-largest U.S. bank, restated earnings for the last four years after improperly accounting for derivatives.
The restatement, which resulted in a net gain of $345 million, cut net income for each of the last three years and increased earnings for 2002, the Charlotte, N.C.-based bank said. The profit increase was less than 1% of the $51 billion the bank earned during the period.
Bank of America joins companies such as Fannie Mae, CIT Group Inc. and General Electric Co.'s finance arm in acknowledging transactions that didn't comply with regulations governing derivatives, financial instruments whose value is based on other securities or indexes.
"This event highlights, once again, the difficulty in determining earnings for derivative transactions," Punk, Ziegel & Co. analyst Richard X. Bove wrote in a note to clients.