Bank of America Corp. posted a fourth-quarter profit Thursday as it continued to shed assets, streamline operations and rebuild core businesses in a slowly improving economy - a bright ending to a year fraught with barbs and barriers.

The Charlotte bank impressed investors and analysts with its progress building capital ahead of new international standards. But some worried the overall results, muddled by one-time gains and losses, don't reveal whether the bank can deliver bigger profits in the year ahead.

"The good news is, it's less likely to need more capital, but now what?" said James Early, an analyst at The Motley Fool. "We still have no idea how sustainable the actual business is."

The $1.6 billion gain for common shareholders, or 15 cents per diluted share, met analysts' expectations and marks a turnaround from the same period in 2010, when the bank lost $1.6 billion as it continued to absorb losses related to its purchase of Countrywide Financial Corp. The bank also turned a small profit for the year.

Shares closed Thursday at $6.96, up about 2 percent from the previous day's close. The bank's stock is up 25 percent for the year after falling nearly 60 percent in 2011.

In a conference call with analysts, chief executive Brian Moynihan, who began his third year at the helm this month, credited the bank's efforts to sell noncore assets, reduce risk, address lingering mortgage troubles and invest in its stronger divisions, such as investment banking and small-business lending.

"The last two years, we've been executing on a huge transformation here at Bank of America," he said. "... As we think about 2012, we begin with a much stronger position."

Business activity improved in the fourth quarter, Moynihan said, with commercial and industrial loan balances and small-business loan originations increasing over the year before.

Deposits were up year over year, too, though they shrank from the third quarter, due in part to customers closing their accounts after the bank implemented a $5 debit-card fee this fall, the CEO said. The bank later scrapped the charge.

The bank continued to trim expenses in the fourth quarter, reducing its headcount by 7,000 employees. That's part of a plan to eliminate 30,000 jobs over the next few years under Project New BAC, Moynihan's wide-ranging efficiency initiative. The bank has not provided specifics on how many jobs it has cut and from what areas.

"It's a balancing act," Moynihan said in response to an analyst's question about whether the bank should be cutting more. "I question every day whether we get it right."

One-time gains and losses also affected the bank's earnings, fueling questions about whether its profits are sustainable. The bank made $2.9 billion from the sale of part of its stake in China Construction Bank Corp., for instance, and took a loss of $1.5 billion in mortgage-related litigation expenses.

Analysts from Stifel Nicolaus said in a research note that the bank earned closer to 1 cent per share in the fourth quarter with those gains and losses excluded. The firm lowered its future earnings estimates for the company, citing "diminished earnings power" after Thursday's report.

Gary Townsend of Hill-Townsend Capital, a Maryland firm that invests in banks, called the fourth-quarter results unimpressive, given the mortgage troubles that continue to plague the company and its investors. He was more pleased with the bank's capital levels - its Tier 1 common equity ratio rose to 9.86 percent in the fourth quarter from 8.6 percent the year before, higher than originally expected - as it undergoes ongoing Federal Reserve stress tests.

"That suggests to the market that their stress testing is more likely to end up satisfactory," Townsend said.

The bank's capital levels still lag some peers in meeting the global standard known as Basel III. Its executives will consider issuing about $1 billion in common stock to certain employees this February as part of their 2011 cash bonus to help boost capital, the bank announced.

Analysts said the bank's performance in coming months depends on how quickly it works through its mortgage issues and what happens in the broader economy.

One big unknown might be resolved soon: Bank of America and other large lenders are working toward a multibillion-dollar settlement with state attorneys general involving improper foreclosure practices, and sources familiar with the matter have said a deal is close.

Moynihan said that settlement, combined with overall improvement in the housing market, could spur a quicker resolution of other outstanding mortgage-related troubles.

In the year ahead, Moynihan still faces questions about his credibility and the bank's public image. That took a hit last year after a series of public-relations flaps, from the ill-timed debit fee to the CEO's pledge early last year to boost the bank's penny-per-share dividend - a move regulators later denied.

Bank executives on Thursday said they didn't plan to ask for a dividend increase any time soon, focusing instead on building capital.

The bank's earnings report came two days after rival Wells Fargo & Co., the San Francisco-based bank that bought Charlotte's Wachovia in 2008, posted a record $3.9 billion profit for the fourth quarter. New York-based JPMorgan Chase & Co., which passed Bank of America last year as the nation's No. 1 bank by assets, gained $3.7 billion, and Citigroup Inc. reported a profit of $1.1 billion.

Bank of America's fourth-quarter earnings were good enough to propel its full-year profit into the black. For 2011, the bank gained $85 million attributable to common shareholders, or about 1 cent per share, up from a loss of $3.6 billion in 2010.

Analyst Tom Brown of Bankstocks.com called the profits "pathetically low," considering the one-time gains. But the increase in capital was "shockingly good" - and maybe enough to turn around investors' sentiment.

"It should be a fun year," he said. "I wouldn't be surprised if, after having been the worst name in the S&P, it will end this year ... in the top five."