Despite robust earnings reports, credit card companies' stocks are in a slide that is beginning to look like an investor panic.

"It is a vicious cycle feeding on itself," said David Hochstim, an analyst at Bear, Stearns & Co. "It will become difficult for investors who are concerned about short-term performance to invest in a lot of stocks when the stocks are not going up."Though MBNA Corp., Capital One Financial Corp., Providian Financial Corp., and Metris Cos. recently reported fourth-quarter earnings gains ranging from 25% to 67% a share, an American Banker index that comprises just these four companies has dropped more than 20% in the last month alone.

Like banks, credit card companies have had to contend with rising interest rates. They have also had to contend with concerns over stagnating loan growth, increasing attention to consumer privacy, and charges of predatory lending practices.

The latest issue to sandbag the stocks came last week, when FDIC regulators called for stricter capital requirements for banks involved in subprime lending. It is unclear whether the measure will go through, or how it would affect any of the credit card specialists, but it is another worry.

So-called sector rotation has compounded the problem, said Stephen Berman, a buy-side analyst with Stein Roe & Farnham Inc. in New York. "Some growth investors that had some stakes in these credit card companies are moving out and putting their work more in technology."

Stocks of the independent credit card companies - with the exception of Metris Cos. - are flirting with their 52-week lows. While the American Banker index of the top 225 U.S. banks lost just 1.8% in the 20 trading days through Thursday, the independent card companies' stocks lost one-fifth of their value.

Analysts are uniformly bullish on the card business, and recommend the stocks. But the downward spiral has been gaining momentum since the earnings reports were released.

Until then, credit card company stocks had outperformed bank stocks, said Reilly Tierney, an analyst at Fox-Pitt Kelton in New York. Credit card companies "had defied gravity," Mr. Tierney said.

But the fourth-quarter earnings reports showed margin compression. They also showed lackluster progress in a key earnings driver, credit card receivables growth, which was about 7.5% in 1999, according to The Nilson Report, an industry newsletter in Oxnard, Calif.

Observers say credit card companies are plagued by privacy concerns. An incident at U.S. Bancorp last fall prompted 20 state attorneys general to investigate the information-sharing practices of the largest banking companies with significant credit card operations. Financial modernization has also undermined the credit card business, because the new law did not fully address consumer privacy issues.

"It is a tasty consumer issue for politicians in the 2000 election," Mr. Tierney said. "People are tired of the nuisance of being called all hours of the night and having their mailboxes jammed with credit card offers."

Providian, Metris, and Capital One, which strongly rely on customer information to cross-sell other products, would suffer the most if the government were to take action on the issue, Mr. Tierney said.

"If that is somehow challenged, it would be the biggest blow to their business model that could have happened," Mr. Tierney said.

Then came last week's proposal by the Federal Deposit Insurance Corp. that would require a bank whose with subprime portfolios to set aside at least twice the usual capital. The requirement would apply if the bank's subprime portfolio amounted to more than 25% of its Tier 1 capital.

Last year card company stocks all suffered in tandem with Providian, which was the subject of an investigation by the San Francisco district attorney's office over lending practices. Though Providian's stock fell the most, other card companies were dragged down. All had recovered most of their losses by November, only to slip again.

Collectively, the investor jitters have taken their toll, erasing any premium that card company stocks had over bank stocks. As of Thursday,, card companies' stock prices had fallen into the mid-teens as multiples of their projected 2000 earnings. MBNA was at 14.7, Metris 12.9, Capital One 14.9, and Providian 12.6.

That may be hard to imagine, given the recent earnings reports. MBNA had earnings of 38 cents a share in the fourth quarter, up 27% over the same period in 1998. Similarly, Capital One was up 34%, at 47 cents; Metris 49%, at 58 cents; and Providian 67%, at $1.10.

Such numbers, coupled with the lower stock prices, might set the stage for a reversal of course, some analysts said.

"You have strong earnings growth and unbelievably depressed valuations," Mr. Hochstim said. "Just as the stocks have weakened dramatically, the reverse could happen if you get money flowing in. It wouldn't be hard to see these stocks recover the ground they have lost."

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