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Earnings at credit card lender

Capital One


declined 26% in the fourth quarter and fell far short of Wall Street expectations.

The McLean, Va.-based company earned $195 million, or 77 cents a share, compared with $266 million, or $1.11 a share, a year ago. Analysts, according to Thomson Financial, had the lender earning 99 cents a share in the quarter.

Total revenue was $2.3 billion, up from $2.1 billion and essentially unchanged from the third quarter of this year. Analyst had expected revenue to come in at $2.7 billion.

The company attributed much of the earnings decline to a sharp increase in marketing and advertising expenditures. In the quarter, Capital One said marketing expenses rose 76% to $511 million, compared to the year-ago quarter.

In the fourth quarter, Capital One advertised heavily on television for its new "PrimeLock" rate card, which ties the rate charged to customers to the prime rate.

Late last year, Minnesota's attorney general sued Capital One, accusing the card company of falsely advertising low rates on its cards and then quadrupling rates if a customer misses a payment.

In the quarter, Capital One also set aside more money to cover loan losses on customer accounts. The provision for loan losses rose to $467 million from $390 million.

In after-hours trading, shares of Capital One lost $3.09, or 3.7%. During regular trading hours, the stock closed down 83 cents, or 1%, to $82.10.