Rising losses from consumer and commercial loans dragged Bank of America Corp. (BAC) to a third quarter loss of $1 billion despite impressive trading and investment banking revenues, which were helped in part by the Charlotte bank's purchase last year of Merrill Lynch & Co.

The Charlotte bank took permanent losses on $9.6 billion from an array of bad debt, including mortgages, home equity loans, credit cards and loans tied to commercial real estate. The bank's revenues fell for the third straight quarter, in part because Bank of America's prior results included billions in asset sales, including a sale of shares in China Construction Bank (CICHY).

The results mark Bank of America's first quarterly loss of the year, and give investors their first detailed look at Bank of America since its embattled Chief Executive Ken Lewis announced in September he will retire at year-end without a plan for who will succeeed him. The bank is working to keep pace with strong rival JPMorgan Chase & Co. (JPM) - which on Wednesday posted third-quarter profits of $3.6 billion - and to demonstrate it's in better condition than beleaguered rival Citigroup Inc. (C), which on Thursday posted very narrow third quarter profits.

Bank of America's report holds signs of hope for the banking industry, which is struggling to hold down losses as rising unemployment and a U.S. economic recession have followed a nationwide slide in housing prices.

The bank's credit card business took permanent losses of $6.5 billion from bad debt - a hefty amount, but about equal with last quarter. The bank also withdrew cash from its account for future loan losses tied to credit cards, instead of adding to the reserve, which suggests the bank expects troubles with its credit card accounts to begin slowing in the near future.