Bank of America Corp. said Tuesday it lost $7.65 billion during the third quarter due to a charge related to credit and debit card reform legislation passed over the summer.

In a dramatic shift, the bank also said it will change its consumer banking strategy to focus on providing customers with incentives to do more business with the bank instead of generating revenue through penalty fees such as overdraft charges. The new legislation that caused Bank of America to take the $10.4 billion charge would also limit certain fees Bank of America has collected in the past.

Excluding the one-time charge, Bank of America earned $3.1 billion, or 27 cents per share, in the three months ending in September. That easily topped the 16 cents per share analysts polled by Thomson Reuters were expecting. Analysts don't typically include special charges in their estimates.

The better-than-expected results were due mainly to a sharp drop in losses tied to defaulting loans. The bank set aside $5.4 billion to cover bad loans during the third quarter, compared with $11.71 billion during the same quarter last year. JPMorgan Chase & Co., which reported results last week, also benefited from a big drop in losses from failed loans.

A drop in defaults is a sign that customers could be regaining their financial footing after the recession, which led to widespread defaults on mortgages, home equity loans and credit cards.

Bank of America and other banks have been stung in recent weeks by accusations that they failed to properly review documents used in foreclosures. Bank of America had halted foreclosures in all 50 states, but said Monday that it would resume foreclosure proceedings in 23 states after reviewing cases there.

Including the special, non-cash charge, Charlotte, N.C.-based Bank of America lost $7.65 billion, or 77 cents per share.

Bank of America shares rose 12 cents to $12.46 in pre-opening trading.