Bank of America Corp. (NYSE: BAC), the second largest U.S. bank by assets, said its first-quarter earnings fell 68 percent due to a $4.8 billion accounting charge related to debt valuation.

Bank of America recorded net income of $653 million, or 3 cents per share, down from $2.05 billion, or 17 cents per share, a year earlier. The per-share profit figures reflect payment of preferred dividends.

Excluding debt valuation adjustments, the bank earned 31 cents per share. Analysts polled by Thomson Reuters, on average, estimated 12 cents per share. The bank said analysts typically don't include debt valuation adjustments in their estimates.

Revenue declined 17 percent to $22.3 billion from $26.9 billion.

CEO Brian Moynihan, who has been trimming costs, said We saw improved profitability in all of our businesses this quarter compared to the fourth quarter of last year. With many of the bank's cost-cutting plans already in place, investors are looking to see it generate stronger earnings.

The Charlotte, North Carolina-based bank said its provision for credit losses fell to $2.42 billion from $3.8 billion a year ago -- the lowest level since the third quarter of 2007, it said. The bank attributed the drop to healthier holdings of credit card, home equity and commercial debt on the back of an improving economy.

Sales and trading revenue excluding accounting adjustments more than doubled to $5.2 billion from $2 billion in the fourth quarter, while revenue from fixed income, currency and commodities excluding adjustments rose to $4.1 billion from $1.3 billion in the fourth quarter and $3.7 billion a year earlier, Bloomberg News reported.

Bank of America shares fell 6 cents, or less than 1 percent, to $8.86 in midday trading.