Bank of America reported a third-quarter loss on Friday, releasing results that showed a bank burdened by credit card delinquencies and mortgage defaults.

The bank, which had big profits in the previous two quarters, reported a loss of $1 billion in the third quarter before accounting for dividends to preferred shareholders, in particular the federal government. When those dividend payments are included, the loss was $2.24 billion.

Some of the red on the balance sheets actually reflected an improvement in its financial condition after the depths of last year. The bank took $2.6 billion in write-downs from improvements in credit spreads, which have narrowed as markets stabilised. And it spent more than $400 million to end a dispute with the government over an agreement to insure its most toxic assets so the bank could complete its acquisition of Merrill Lynch.

In a conference call to discuss the bank’s performance, its chief executive, Kenneth Lewis, struck an elegiac note. Lewis, under fire for the bank’s performance and the Merrill deal, is stepping down at the end of the year.

“I just wanted to say thank you for the ups you’ve shown me during my time with you and the support you’ve shown the company,” Lewis said. “It’s been a pleasure to lead Bank of America and interact with all of you. I have no doubt that Bank of America will thrive and my absence will not slow the momentum that is starting once again to move forward.”

The loss of 26 cents a share for the three months from July through September compared with a profit of $3.2 billion, or 33 cents, in the second quarter. Wall Street analysts had been expecting a loss of 12 cents a share. The bank earned $1.18 billion, or 15 cents a share, in the quarter a year ago.

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