Bank of New York's $350 million provision against credit card losses hit the stocks of finance and credit card companies particularly hard last week.

For the week through the close of trading Thursday, Advanta Corp. dropped 13.8%, Olympic Financial 13.5%, and Money Store, 9.7%.

"When you have credit quality concerns, a lot of investors have a knee- jerk reaction," particularly toward the finance companies, said Thomas O'Donnell, a bank analyst at Smith Barney Inc.

Analysts generally said the strong market reaction reflected the gains finance companies have made to date and were driven more by fear than by looming problems.

"Nothing I've seen so far changes my generally positive outlook for consumer finance stocks," said Michael Diana, a finance company analyst at Bear Stearns & Co.

Mr. Diana said actual losses have been well below anticipated losses at these companies. He predicted two things that would "turn the tide" in the coming months: a decision by the Federal Reserve not to raise rates, and strong finance company earnings reports.

Olympic Financial could well exceed analysts' earnings estimates for the second quarter, Mr. Diana said, predicting earnings of 40 cents per share. The company earned 37 cents per share in the first quarter.

"That would be a phenomenal performance considering the fact that Olympic issued eight million new shares in the quarter," Mr. Diana said.

Katrina Blecher, a bank analyst at Gruntal & Co., said that some companies, including Beneficial Corp. and MBNA Corp., have reversed their declines in credit quality.

"The businesses these companies are in benefit from all the bank's problems," Ms. Blecher said.

An inability to pay bills encourages consumers to go to finance companies, where they can obtain secured or unsecured loans that require lower monthly payments.

Indeed, up until the Bank of New York's provision announcement, the finance companies had outperformed the rest of the bank market.

Some of the loss in share value "was clearly profit-taking," said Thomas Facciola, a finance company and credit card analyst at Salomon Brothers Inc.

Mr. O'Donnell said that Money Store was up 51% for the year, even after losing 5% by the end of last week.

To be sure, some analysts saw reasons for concern for the credit card banks and finance companies.

"The consumer debt levels are high and keep rising at a very rapid rate," said Gary Gordon, a bank analyst at PaineWebber Inc.

Mr. Gordon said that installment credit has grown at 2.5 times disposable income, and credit card debt three to four times disposable income.

"It's a simple fact of life that consumers are growing debt faster than income," he said.

Mr. Gordon, who has a "hold" rating on all the finance companies he covers, including Household Finance, Beneficial Corp., and Money Store, anticipated an increase in loss rates over the next year and a half.

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