Capital One's ( COF) third-quarter earnings narrowly missed analyst estimates, as credit quality continued to decline.

The McLean, Va.-based firm reported quarterly net income of $374.1 million, or $1 a share, vs. a loss of $81.6 million, or 21 cents a share, in the third quarter of last year. Profit from continuing operations slid by more than half to $385.8 million, or $1.03 a share.

As the credit crisis intensified last summer, Capital One shuttered its wholesale mortgage arm, which it inherited when it bought North Fork Bancorp in 2006, and took an $860 million charge in the year-earlier quarter to clean up the mess.

Analysts, according to Thomson Reuters, expected the consumer finance company would make $1.01 a share for the quarter.

In recent after-hours trading, shares were down fractionally to $38.80.

The company added $208.6 million to its allowance for loan losses, bringing its total allowance to $3.5 billion. Capital One says the addition is "consistent with an outlook of $7.2 billion in managed charge-offs through the third quarter of 2009."

Within Capital One's national lending segment, its main credit card arm, managed charge-offs rose 18 basis points from the second quarter to 5.85%, while delinquencies rose 56 basis points to 5.43%.

"Against the backdrop of increasing economic headwinds and unprecedented change in the financial services landscape, Capital One continues to deliver profits and generate capital," Chairman and CEO Richard Fairbank said in a statement. "But we are not complacent. Based on what we are seeing in the world around us, we are significantly increasing the intensity of our efforts to aggressively manage the company for the benefit of investors and customers through the current downturn."

Capital One has been vocal this year about pulling back on loan growth as industry trends and economic indicators weaken.

The company said in its U.S. card segment charge-offs fell 13 basis points to 6.13% from the second quarter, but rose from 3.85% in the year-earlier quarter. The company reiterated that it expects U.S. card charge-offs to rise to around 7% for the fourth quarter, and in the mid-7% range for the first quarter of 2009.

Big banks including Bank of America ( BAC) and Citigroup ( C) also have large exposure to declining credit trends in consumer cards business.

"While Capital One's credit card segment has remained resilient relative to other lending segments, the severity of the current economic environment coupled with lower loan growth is now beginning to exhibit pressure on Capital One's credit card loan portfolio," Oppenheimer analyst Meredith Whitney wrote in a note on Wednesday.