Bank of America profit boosted by one-time gains

Signs of improvement in the economy and gains from asset sales helped Bank of America Corp post a quarterly profit, sending its shares higher on Thursday, but the second-largest US bank still needs more capital and with little left to sell, it is becoming creative.

Bank of America said it was considering issuing $1 billion in common stock to certain employees in lieu of a portion of their year-end cash bonuses next month.

The move, a large stock issue to effectively captive investors -- its employees -- could further pad the bank's capital levels, but at the same time dilute shareholders' interest and may stir discontent among some bankers.

Investors, however, seemed to shrug aside such fears and focus instead on Chief Executive Brian Moynihan's success so far in building up capital levels and fixing the bank's problems.

The fourth-quarter profit after a year-ago loss, improving loan demand and better credit quality, all helped buoy Bank of America's shares, which rose 5.7 percent to $7.19 in morning trading on the New York Stock Exchange.

Bank of America was still trying to recover fully from the aftermath of the 2008 financial crisis and a disastrous acquisition of mortgage lender Countrywide Financial that has saddled the company with losses.

Last spring, Bank of America launched a wide-ranging efficiency program called Project New BAC, which is expected to eliminate 30,000 jobs in its first phase over the next few years.