Capital One Financial Corp. (COF) Chairman and Chief Executive Richard Fairbank on Thursday poured cold water on hopes that a decline in early-stage delinquencies signals fewer loan losses ahead.

"Up until this last quarter" Capital One experienced "very low" early-stage delinquencies, but nevertheless fast rising delinquencies overall, he said. So improvements in early-stage delinquencies don't "indicates any really important green shoots in the credit performance of consumers," Fairbank said.

"Mostly what the second quarter is about is really about seasonal benefits. I think some benefits from the stimulus direct cash to consumers pocket, stimulus and collectively a slightly better than expected credit performance."

Fairbank said, "We expect further increase in U.S. card charge-off rates through 2009 as the economy continues to weaken. We also expect that our U.S. card charge-off rates will deteriorate at a faster rate" than the economy, in part because Capital One makes fewer loans and increased minimum payment requirements that might make it more difficult for some customers to pay their card bill.

"We now expect [the] unemployment rate to increase to around 10.3% by the end of 2009, up from our estimate of about 9.6% last quarter. Our prior assumption for home prices was for the Case-Shiller index to fall by around 39% peak to trough. We now expect modestly worse peak to trough of 42%," the chief executive said.

Chief Financial Officer Gary Perlin said Capital One is confident that none of the accounting changes currently discussed by the U.S. Financial Accounting Standard Board would require the bank to raise fresh common equity.

-By Matthias Rieker, Dow Jones Newswires; 212-416-2471; matthias.rieker@dowjones.com