Capital One Financial (COF) keeps waiting for its U.S. credit-card holders to become comfortable with a bit more debt. It's been a long delay, and one that will likely continue well into 2014.

Capital One's U.S. card business saw a 12% decline in loan volume last year, the company announced Thursday. Even after excluding unusual events, including the sale of a store-branded loan portfolio to Citigroup (NYSE: C), credit card loan volume fell by 1%.

The positive news for the card issuer is that its customers who are borrowing are promptly making their payments. The downside is that the company is unlikely to capture additional profits from reduced chargeoffs because chargeoffs are at or near all-time lows and probably won't go much lower.

"When you really look at why credit is so good, it's just sort of hard to imagine getting too much better from here," Chief Executive Officer Richard Fairbank told analysts Thursday.

Capital One, which derives more than half of its revenue from its U.S. card business, saw its earnings fall to $859 million, or $1.45 per share, in the fourth quarter. That was the company's smallest profit in a year, and it fell well short of the $1.57 per share consensus of analysts surveyed by Bloomberg.

After Capital One announced its earnings, the firm's shares fell by about 2% in after-hours trading.

Capital One's loan woes reflect a broader trend in the card industry, but the problem is more acute at the McLean, Va., company than at some of its competitors.

American Express (AXP) announced Thursday that its U.S. credit card loans grew by 3.5% in the fourth quarter compared to the same period a year earlier. Discover Financial Services (DFS), which has been the industry leader in loan growth, reports its fourth quarter earnings on Jan. 23.

Since early 2009, credit card loans across the industry have contracted by about 18%, according to a Jan. 10 report by Credit Suisse. That report projects that organic industry balance growth will be 3% in 2014, which would be an improvement over last year.

Moshe Orenbuch, a Credit Suisse analyst who co-wrote last week's report, said there's a segment of credit-card users who remain much more reluctant to borrow than they were prior to the recession. When the economy got shaky, credit lines were slashed, and many customers felt burned.

"You never had a situation in the credit card industry before where you had widespread cutting of credit lines," Orenbuch said.

David Darst, an analyst at Guggenheim Securities, said that loan volume across the card industry appears poised to pick up in 2014. "Most of the consumer deleveraging appears to have run its course," he said in an interview before Capital One reported its earnings.

But in its Jan. 10 report, Credit Suisse projected that Capital One will see 0% growth in its card balances outstanding this year, trailing all of the other major competitors in the U.S. credit card business.

On Thursday, Capital One officials acknowledged that their immediate goals for card growth are modest. CEO Fairbank said that he does expect a pickup, but not until the second half of 2014.

"New account originations are growing," Fairbank said, "and we're seeing more opportunities to increase lines for existing customers, which should improve the trajectory of both loan growth and purchase volume growth over time."

Fairbank also argued that the company's sluggish loan volume reflects strategic choices Capital One has made, including its decision to avoid consumers who maintain high balances. He has long expressed wariness about competing for such customers, noting that issuers often lure them with long introductory periods featuring teaser rates.

"We don't believe that the pricing there is, to our own projections, resilient enough," Fairbank said Thursday.

Until its credit card loans begin to grow, Capital One will continue to rely relatively heavily on customers who pay off their entire balance each month. Such purchases generate swipe fees that have become an increasingly important part of Capital One's profits.

But Capital One has to fight hard for those regular spenders, as all of the major card issuers continue to offer generous rewards to lure them. "And the reward space is intensely competitive," Fairbank said.

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