Though consumer bankruptcies increased significantly during the first quarter, analysts who cover credit card companies said their stock should hold up.
Growth of 8% to 10% in card accounts this year should partially offset a 20% increase in bankruptcies, said Robert G. Hottenson, an analyst with Goldman Sachs Group in New York. 
Mr. Hottensons remarks came in a research note published Tuesday, on the heels of data from the American Bankruptcy Institute, which showed that consumer bankruptcies grew a hefty 18.25% during the first quarter, even though filing rates inched up only 0.7% in the 12 months that ended March 31. The 12-month total of bankruptcies was up 0.5%, but business filings fell 5.6%.
So far this year bankrupts are up 23%, which is somewhat higher than our 15% to 20% forecast, Mr. Hottenson wrote.
The first-quarter rise was mostly due to an increase in individual filings in late March as people, anticipating a change bankruptcy legislation, hurried to file. Indeed, shares of credit card companies suffered in late March but recovered in April.
Normally bankruptcies peak about 10 weeks after Christmas, said Joel J. Houck, who follows the credit card industry for A.G. Edwards & Sons in St. Louis. This year it could be as late as 15 to 20 weeks into the year until [bankruptcy] rates decline, so the picture should become clearer by the end of June.
But the flow of bankruptcy filings by individuals appears to be slowing, according to recent data, said Goldmans Mr. Hottenson. The late March/early April surge in filings seems to have abated and has possibly reached a plateau.
Credit card stocks have already factored in the effects of the bankruptcy filing trends, according to Mr. Houck.
Bradley G. Ball, an analyst at Prudential Securities, rates the sector as neutral, agreeing that the increase in bankruptcy filings eased over the last weeks but adding that there could be a second spike later this year or early next year, depending on when the bankruptcy reform bill is signed.
Mr. Hottensen said Household International Inc. in Prospect Heights, Ill., and MBNA Corp. in Wilmington, Del., may be best positioned to navigate through the current economic volatility, as both companies benefit from lower funding costs due to falling interest rates. MBNA is among the few companies that is experiencing widening margins, Mr. Hottensen said.
But Mr. Houck said that this is not enough to prepare the company from a possible economic downturn. There is a limit to that dynamic, he said. He picks Household and Capital One Financial Corp. in Falls Church, Va., as the best positioned to withstand any further downturn in the economy.
Providian Financial Corp. in San Francisco is the company to watch should the economy take a turn for the better, Mr. Houck said.
However, Mr. Hottensen cautioned Providian investors to invest in the stock before earnings for the current quarter are released. Should losses be moderate or in line with our expectations and company guidance, we believe the shares have strong potential upside, he wrote.
Providian was down 0.45% on Tuesday. MBNA fell 1.6%, Capital One 0.94%, and Household 0.41% in a generally mixed market. The American Banker index of 225 banks fell 0.18%, and the Standard & Poors 500 index lost 0.78%.
Meanwhile, Rosalind Looby of Credit Suisse First Boston downgraded BB&T Corp. in Winston-Salem, N.C., to hold from buy and upgraded Memphis-based National Commerce Bancorp. to buy from hold.
Ms. Looby wrote in her note about BB&T that the stock ran up to an 8% premium to the S&P bank index group, which it has outperformed by 11% since she began following the company last year. We continue to view BB&T as one of a select few midsize regional banks that is able to differentiate on customer service, she wrote.
National Commerce, on the other hand, got punished by the market for its decision earlier this month to restate its earnings back to 1997 after a review by the Securities and Exchange Commission raised questions about how it accounted for mergers as well as its loan-loss reserves.
While clearly disappointed by the need for restatement, which stemmed for a misunderstanding by management about pooling accounting rules, we believe that National Commerce is fundamentally a strong bank with healthy earnings momentum, Ms. Looby wrote.
National Commerce was up 3.15%, while BB&T fell 0.42%.
