Bank of America Corp., the second- biggest U.S. lender, said fourth-quarter profit more than quadrupled as the company sought to quell claims tied to defective mortgages. The results beat most Wall Street estimates, and the stock rose in early New York trading.

Net income of $3.44 billion, or 29 cents a diluted share, rose from $732 million, or 3 cents a year earlier, according to a statement today from the Charlotte, North Carolina-based firm. The average estimate of 27 analysts surveyed by Bloomberg was 27 cents, adjusted for one-time items. For the full year, profit more than doubled to $11.4 billion.

Chief Executive Officer Brian T. Moynihan, 54, has spent his four years atop Bank of America resolving disputes tied to shoddy home loans and foreclosures, mostly from his predecessor's 2008 takeover of Countrywide Financial Corp. He signaled in November that attention is shifting from the mortgage cleanup to improving performance at operating units, calling his firm a "huge battleship" that is gaining speed.

"They're looking considerably better than a year ago," said Marty Mosby, a bank analyst at Guggenheim Securities LLC with a neutral rating on the stock. "The Street now believes their story, which is that remaining mortgage costs will be manageable."

Bank of America's stock rose 34 percent last year, just under the 35 percent gain of the 24-company KBW Bank Index. The shares added 7.7 percent this year through yesterday to $16.77 as analysts including Citigroup Inc.'s Keith Horowitz upgraded the firm to a "buy" in anticipation that costs will recede.

Investors could choose Bank of America and bigger rival JPMorgan Chase & Co. to take advantage of an improving U.S. economy, Horowitz wrote in a Jan. 2 research note.

Moynihan has spent more than $50 billion on mortgage and foreclosure disputes and the company still faces demands that it atone for activities that contributed to the 2008 credit crisis.

Bank of America may have to pay $5 billion to $8 billion to settle a Federal Housing Finance Agency suit after JPMorgan's $4 billion accord set "a relatively high bar," Fitch Ratings said in October. The FHFA lawsuit cited about $57 billion of mortgage-backed securities from Bank of America, compared with about $33 billion in the JPMorgan case, Fitch said.

The lender also faces a U.S. lawsuit for claims it misled investors over the quality of mortgages within an $850 million bond and said in October that the Justice Department may file another suit tied to home loans.

JPMorgan said yesterday that fourth-quarter profit fell 7 percent to $5.28 billion on costs from legal settlements. Wells Fargo & Co., the biggest home lender, said net income rose 10 percent to $5.61 billion, setting a record for the quarter and the year. Citigroup reports results tomorrow.

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