The most successful credit card companies have more in common than management talent and marketing smarts, rapid growth and rising profits.

They have faith.

While clouds were gathering this year over the consumer credit market - most disturbingly, an upturn in the delinquency rates that are leading indicators of bankruptcies and chargeoffs - card industry leaders didn't panic. They had strategies in place and were unwavering in their commitments. The results didn't disappoint.

Specialized card lenders, the so-called monoline companies that have set the industry's pace in growth and innovation throughout the 1990s, continue to post returns on assets and equity that are multiples of banking averages. ROAs of 3% or 4% and ROEs of 30% or 40% have become the norm.

Where many commercial bankers are satisfied with a steady stream of 8% or 10% annual earnings increases, several credit card leaders are doing better than 30%. They have had the luxury of dismissing recent rises in delinquencies and chargeoffs as minor, or at least within expectations.

Behind this superior performance is a new breed of managers, rooted in traditional banking but bringing such high levels of new skills and sophistication - strategic, analytical, and technological - that they have essentially reinvented the credit card business.

Capital One Financial Corp., for one, didn't even exist until its 1995 spinoff by Signet Banking Corp. Richard Fairbank and Nigel Morris have forged an unusual top-management "partnership" to oversee an emerging consumer finance empire, with credit cards at its core. (See page 6A.)

And while Capital One mines and probes its vast data bases, culling the elements of finely tailored and targeted products from thousands of "test cells," Providian Bancorp tries to go it and everybody else one better. It is constantly seeking the next breakthrough in mathematically based profiling and prospecting, following the precepts of visionary chief executive Shailesh Mehta. (Page 10A.)

Such striving is not confined to the monolines - a group that is also represented in this fourth annual American Banker supplement on card industry leaders by First USA Inc. and MBNA Corp.

All nine companies in this edition (space did not allow more; Advanta Corp., which we profiled last year, could lead the "honorable mentions") aspire to a monoline-like strategic focus on marketing creativity and the ever-critical underlying technology.

All would probably share First USA chairman John Tolleson's conviction that "the credit card is the most important financial tool for the consumer today."

All exude a confidence typified by Providian Bancorp president Julie Montanari, who, when asked about declining credit quality, said: "We are better-positioned than most."

All could identify with MBNA America Bank chairman Charles Cawley's stubborn unwillingness to let up: "Success is only as good as today. Complacency is the only enemy we could have." (Page 8A.)

None shows any sign of retreating. If anything, they are spreading their wings: Capital One and First USA now own thrifts as well as credit card banks. MBNA is mapping new approaches to the European market. Providian is making a big play for the unbanked market, starting with secured cards.

Among the "traditionals," Wachovia Corp. did some reinventing of its own several years ago and is consolidating its gains under the new leadership of Beverly Wells. (Page 11A.) The more modest-sized People's Bank of Bridgeport, Conn., in common with MBNA and others, is carrying its niche strategy across the Atlantic. (Page 13A.) First Tennessee Bank has remained a force in merchant processing despite the retreat of many larger institutions. (Page 14A.)

How have the profitable card companies reacted to delinquencies and losses? In stride.

Providian Bancorp reported a 5.49% credit card loss ratio in the second quarter, up from 5.07% and 4.49% the two previous quarters. It was "consistent with industry trends and Providian's expectations," the parent company, Providian Corp., said.

MBNA proclaimed that its loan losses of 3.46% in the June quarter were "significantly lower than published industry levels." Capital One was at 3.97%; First USA, 4.01%. None suffered noticeably at the bottom line because of credit quality; First USA's quarterly net income jumped 36%; its fiscal-year total, 38%.

"Using sophisticated tools for credit management, we will continue to manage our portfolio prudently and keep a close watch on the overall consumer credit picture," said Capital One's Mr. Morris.

Those tools are these companies' lifeblood and line of defense. But keeping up with changes is becoming more difficult, said Mr. Mehta of Providian. A pioneer in predictive modeling, Mr. Mehta said the credit card marketing boom has required major changes in risk analysis, a "dynamic management of credit" to account for rapid changes in consumers' card preferences and behaviors.

"We are becoming better at variables and analysis," he said. "We have to keep changing as the total business changes."

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