The mistake, undetected for several years, forced the bank to announce it actually had $4 billion less capital than originally reported. Although not catastrophic, an error of that size adds mistrust about the company's internal accounting.
It also made the bank's shares a bargain.
After Bank of America reported the error to the Federal Reserve it was required to suspend an approved share buyback and a planned 4 cents increase in its quarterly dividend. Since the March 21 52-week high of $18.03, shares of BAC have cratered more than 20% to a low of $14.39 on May 15.
Shares closed Thursday at $14.55, down nearly 7% for the year to date.
If the Fed is satisfied with the bank's solutions, it will likely be allowed to increase its dividend -- though Bank of America officials indicated at the annual meeting they expected the distributions to be less than originally announced.
If you're considering the stock, this $4 billion embarrassment helped depress the share price into the bargain basement, in my opinion. The 52-week low of $12.13 back in July 2013 is another 16% below. Although I don't expect the stock to fall that much it is possible.
Bear in mind that the three biggest individual shareholders of the company are the CEO, the Chief Financial Officer and the Co-Chief Operating Officer Thomas Montag. Between the three they own or control more than two million shares of BAC, according to the latest filings.
"With my entire net worth in this company...my interests are completely aligned with yours," Moynihan told shareholders at the annual meeting. This is one reason I anticipate management at Bank of America will work hard to demonstrate the behemoth bank isn't too big to manage.