First Niagara Financial Group in Buffalo, N.Y., overstated its allowance for loan and lease losses from the middle of 2013 through the end of 2014 and may restate earnings for the period.
The "misconduct of a mid-level employee" led to the overstatement, the $38 billion-asset First Niagara said in a Tuesday afternoon regulatory filing. First Niagara did not identify or provide the job title of the employee, who has been fired.
First Niagara is working to correct the allowance overstatement, which will result in an increase in retained earnings and changes to the bank's coverage ratios, which measure its ability to absorb potential losses from bad loans. The company did not provide an exact date when the overstatement began, but it spanned at least five quarters.
First Niagara said it will complete its analysis of the effect of the overstatement "as expeditiously as possible" and it may issue a revised version of financial statements when it files its annual report. The company said it expects to file its annual report late.
The overstatement is the latest snafu for First Niagara's management to confront.
The bank last quarter set aside a reserve of $22 million to cover a "process issue on certain customer deposit accounts." First Niagara has not yet provided more details on the process issue.
It also took a $1.1 billion goodwill impairment charge in the third quarter to cover declines in the value of certain assets.