Gateway Financial Holdings Inc. in Virginia Beach said it would restate its earnings to correct its accounting for a $150 million interest rate swap agreement.
The restatement, which would bring the $985 million-asset company's books into compliance with Statement of Financial Accounting Standards No. 133, will slash Gateway's first-quarter earnings by 84%, to $224,000, and second-quarter earnings by 42.4%, to $864,000.
"This issue has affected many financial institutions who, like us, believed their initial accounting treatment for the transactions was appropriate," Theodore L. Salter, Gateway's chief financial officer, said in a press release Monday. "These transactions were proper, have created effective economic hedges, and have performed as anticipated."
Gateway said that it would not restate earnings for last year, since the transaction took place Dec. 31 and did not have a significant effect on its finances for that year.
