Capital One Financial Corp. reported sharply higher first-quarter earnings yesterday as the credit card company slashed advertising expenses and loan quality improved slightly.

The McLean company's profit for the three months ended March 31 was $309 million ($1.35 per share), up 64 percent from $188 million (83 cents) for the same period of last year. Revenue rose to $2 billion from $1.9 billion.

"While lots of companies like to point at the recession, we really can't see much of a recession in our numbers," said Capital One chief executive Richard D. Fairbank. "The consumer has been holding this economy [up], and I think that will continue."

Capital One's earnings were boosted somewhat by lower interest rates, which have made it easier for consumers to continue borrowing money. Total loans on March 31 were $28.1 billion, compared with $24.4 billion a year earlier.

"Clearly the earnings power of this company in the near term is going to be driven by credit," said Todd Pitsinger, an analyst at Friedman, Billings, Ramsey & Co. in Arlington.

Lower interest rates have also made it easier for consumers to consolidate large credit card debts into a refinanced mortgage, a home-equity loan or another form of installment loan, which has reduced the number of the company's delinquent accounts. Capital One executives said the company's rate of account balances charged off as uncollectable increased slightly in the first three months of the year, but said they expect it to decline.

Capital One's provision for loan losses, the amount of money set aside to cover accounts expected to become problem loans, declined to $375.9 million in the first quarter from $389.6 million a year ago.

"The overall improvement in credit quality has enhanced their operations," Pitsinger said.

Capital One released its first-quarter financial results yesterday after the stock markets closed. Shares in the company closed slightly lower, down 13 cents at $37.29. The stock has been trading well below its 52-week high of $66.06 since last summer, when shares plunged after the company reached an agreement with federal regulators that led to a sharp increase in its provisions for bad loans in the third quarter of 2002.

"We certainly feel awfully good today that we have successfully negotiated a difficult period and now see overall risk improvement," said Chief Operating Officer Nigel W. Morris. Yesterday the company also said that Morris, one of Capital One's founders, was stepping down from his position as president and chief operating officer on May 1 to assume the role of vice chairman of the board of directors, the first step in his departure from an executive management role at the company. Morris said he hopes to spend more time with his family and pursue other interests.