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Capital One Financial Corp., a leading issuer of MasterCard and Visa credit cards, reported a higher-than-expected first-quarter loss Tuesday, hurt by growing credit losses and higher provisions for bad loans, sending its shares down almost 10%.

The company posted a quarterly loss available to common shareholders of $176.1 million, or 45 cents per share, compared with profit of $548.5 million, or $1.47 per share, a year earlier.

Capital One (COF, Fortune 500) also reported losses from continuing operations of 39 cents per share. On that basis, analysts expected a loss 4 cents per share, according to Reuters Estimates.

In the U.S. credit card business, charge-offs — debts the company believes it will never collect — increased to 8.39% in the first-quarter from 7.08% in the fourth quarter.

"I was expecting a negative number, but not the number they posted. It reflects the economic climate that we are facing right now," said Keith Wirtz, president and chief investment officer of Fifth Third Asset Management.

"It suggests we should brace for more bad news as the year continues in those areas that are consumer sensitive," he added.

Capital One set aside $124.1 million for loan losses, anticipating a further deterioration of its credit portfolio that is under pressure as unemployment rises.

Capital One’s total managed revenue fell 18.6% to $3.7 billion.

"Our first quarter results reflected significant pressures from the worsening economy," Capital One’s Chairman and Chief Executive Richard Fairbank said in a statement no teletrack payday loans.

McLean, Virginia-based Capital One estimated that managed charge-off losses will be higher than the $8.6 billion estimated for 2009, but declined to give an specific outlook, "given significant uncertainty in the economy."

Last month, the bank cut its quarterly dividend by 87% to save $500 million annually — only one year after a 14-fold increase in the payout.

The company once specialized in credit cards but expanded into branch banking in recent years after acquiring Hibernia Corp. and North Fork Bancorp Inc. More recently, the February acquisition of Chevy Chase Bank expanded its presence in the affluent suburbs of Washington, D.C.

Capital One, which received $3.55 billion in U.S. taxpayer funds last year, was recently stress-tested to see whether it needed additional capital. The results have not been disclosed, but analysts have estimated the company may need more capital.

Capital One’s shares fell 9.4% to $13.63 in after-hours trading. The stock had closed up 12.48% to $15.05 on the New York Stock Exchange.

The company’s shares have dropped about 52% this year, more than the 25% decline in the KBW Bank Index. 

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