Bank of America presents its income statement first among its financial statements, and this shows a healthy increase in net income of 18 percent from 2004 to 2005, and nearly 30 percent from 2003 to 2004. Although interest income increased more than 36 percent from 2004 to 2005, the institution's interest expense increased nearly 86 percent. This indicates that the company is facing costs that significantly outpace its revenue. It is important to note that the company is restating its financial statements for 2004 and 2003 due to inconsistencies with the Statement of Financial Accounting Standards and the way that the company accounted for its derivatives, particularly with regard to interest rate swaps. While these can be useful instruments in helping the company hedge risk, there are specific rules regarding their accounting that the bank apparently misunderstood and is now correcting. This could account for the lower increase in net income from 2004 to 2005 ("Bank of America," 2006).
             The company's balance sheet indicates that total assets increased 16.3 percent. Total liabilities increased 17.8 percent while stockholder equity increased a scant 1.2 percent. Of note is the increase in the company's federal funds sold and securities purchased, which increased nearly 70 percent from 2004 to 2005 under the restated rules. Some of this is pledged as collateral against the bank's activities ("Bank of America," 2006).
             The amount of common stock outstanding has fluctuated significantly over the period in question. The company had 3.0 billion shares outstanding at the end of 2002; this fell to 2.9 billion in 2003, rose to more than four billion in 2004, and fell slightly to $3.9997 billion in 2005. The company has increased its common stock dividend on a per-share basis each year; this combined with the higher number of outstanding shares results in a greater liability for dividends in each year. The restatement of earnings ...