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SAN FRANCISCO — Crippled credit card issuer Providian Financial Corp. endured another Wall Street beating Thursday as investors expressed disappointment with the company’s turnaround efforts and news that its loan losses continued to rise in October. 

Shares in the San Francisco-based company fell 81 cents, or 22 percent, to close at $2.87 on the New York Stock Exchange. The plunge reversed a recent rally from the battered stock’s low of $2 reached last week. The stock peaked at $66.72 last year. 

The latest sell-off reflected a reaction to several announcements that the company made after the stock market closed Wednesday, as well as a Thursday disclosure that the rate of losses in its $32 billion portfolio rose from 10.33 percent in the third quarter to 12.06 percent as of Oct. 31. 

“Obviously, we haven’t seen the bottom with this company yet. It just keeps getting uglier,” said industry analyst Jennifer Scutti of CIBC World Markets. Scutti is worried the company’s loan losses will rise to 14 percent or 15 percent of the portfolio during the next few months. 

Providian officials had been hoping the market would cheer Wednesday’s announcement of $900 million in new financing. Providian’s investment bankers — Salomon Smith Barney and Goldman, Sachs & Co. — are raising the money by selling notes secured by some of the company’s credit card loans. 

But that piece of good news wasn’t enough to ease concerns about a possible crackdown by federal regulators worried about the mounting loan losses at the nation’s fifth-largest issuer of Visa credit cards and Mastercards. 

As of Sept. 30, Providian remained “well capitalized” under the key categories measured by regulators. Nevertheless, regulatory restrictions remain “a threat,” said industry analyst Matthew Park of Thom Wiesel Partners, until the company’s loan losses taper off. 

Regulators are bound to keep a close eye on Providian, Park said, because it held $15.9 billion in government-insured deposits as of Sept. 30. 

Providian depends on the deposits to fund its credit card loans, but the recent revelations about its financial woes are making it more difficult for the company to attract money.  

Depositors pulled $59.1 million from Providian’s bank in October. 

Providian also aggravated some investors Wednesday by backing off management projections of fourth-quarter earnings between 10 cents and 15 cents per share. The company also withdrew its pledge to turn a profit next year. Providian provided the earnings reassurance less than a month ago. 

“This is a company that has fooled us time and time again,” Scutti said. “No one is going to believe what they say anymore.” 

As part of its rebuilding efforts, Providian is searching for a new CEO to replace is longtime leader, Shailesh Mehta. The company hopes to hire the replacement before the end of the year. 

To offset some of its losses, Providian is slashing expenses by closing a Nevada office next month and laying off 700 employees, or 5 percent of its work force. The company also suspended its quarterly dividend of 3 cents per share. Combined, these measures, outlined as part of Wednesday’s announcements, will save Providian $54 million annually. 

Providian also plans to sell $3 billion of high-risk loans that contributed to the company’s miseries.The company will likely have to sell the problem loans at a sharp discount, Park said, a move that threatens to further weaken its balance sheet. 

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On The Net: 

http://www.providian.com