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 Providian Financial Corporation Reports Third Quarter 2003 Earnings Of $85.3 Million; Earnings Per Diluted Share of $0.29New Strategic Partnership Programs Announced Net Credit Losses Continue To Decline
   Wednesday, October 29, 2003 5:13:17 PM ET

SAN FRANCISCO, Oct 29, 2003 /PRNewswire-FirstCall / -- Providian Financial Corporation (PVN ) today announced net income for the third quarter of 2003 of $85.3 million, or $0.29 per diluted share.

"We delivered a solid quarter that was consistent with our expectations," said Joseph Saunders, Providian’s chairman and chief executive officer. "This quarter we also made significant strides in the extension of our marketing strategy with the announcement of several new strategic partnerships that we expect will contribute to our account and receivables growth going forward."

Third Quarter Financial Highlights

Total net revenues on a reported basis, comprised of reported net interest income and reported non-interest income, totaled $526.3 million in the third quarter of 2003, compared to $521.1 million in the second quarter of 2003. Total net revenues on a managed basis, comprised of net interest income and non-interest income from both reported and securitized loans, totaled $977.1 million in the third quarter of 2003, compared to $1,043.8 million in the second quarter of 2003. The reported and managed net interest margins on loans in the third quarter of 2003 were 8.87% and 14.79%, compared to 10.16% and 15.09% in the second quarter of 2003, respectively.

Net credit losses in the third quarter of 2003 were better than the Company’s expectations at $156.2 million on a reported basis and $607.0 million on a managed basis, resulting in reported and managed net credit loss rates of 10.65% and 14.37%, respectively. The third quarter net credit loss rates compare to a reported net credit loss rate of 14.19% and a managed net credit loss rate of 16.84% in the second quarter of 2003. The Company’s reported and managed 30+ day delinquency rates at the end of the third quarter of 2003 were 7.18% and 9.68%, respectively, compared to 7.64% and 9.72%, respectively, at the end of the second quarter of 2003.

Non-interest expense for the third quarter of 2003 was $286.6 million, compared to $324.6 million in the second quarter of 2003. The majority of the reduction in non-interest expense was driven by non-marketing expenditures, including lower collections costs and lower expenditures for salaries and employee benefits.

Loans receivable, as of September 30, 2003, were $5.99 billion on a reported basis and $16.95 billion on a managed basis. This compares to reported loans receivable and managed loans receivable at June 30, 2003 of $6.42 billion and $17.80 billion, respectively. The reported and managed loans receivable at June 30, 2003 included approximately $667 million in loans held for sale that were sold on August 1, 2003. The Company added approximately 400,000 gross new accounts in the third quarter of 2003 and ended the quarter with approximately 10.8 million customer accounts.

The Company ended the third quarter of 2003 with total equity of $2.26 billion and an allowance for credit losses of $644.0 million, which together represent 48% of reported loans and 17% of managed loans. Cash and investments ended the quarter at approximately $5.8 billion, representing approximately 97% of total reported loans and approximately 34% of total managed loans.

Strategic Partnership Programs

The Company recently announced several new strategic partnerships including an agreement with MBNA to cooperatively issue the eBay "Anything Points" MasterCard, an agreement with the Democratic National Committee to market DNC Visa cards and an agreement with the North American Membership Group to issue affinity credit cards for its membership clubs.

Managed Financial Information

The Company presents financial information on both a reported and managed basis. "Reported" financial information refers to GAAP financial information while "managed" financial information is derived by adjusting the reported financial information to add back securitized loan balances and the related finance charge and fee income, credit losses, and net interest costs. The interests the Company retains in the securitized loan balances creates financial exposure to the current and expected cash flows of the securitized loans. Although the loans sold are not on the Company’s balance sheet, their performance affects the Company’s retained interests in the securitizations as well as its results of operations and its financial position. In addition, the Company continues to service the securitized loans.

About Providian

San Francisco-based Providian Financial is a leading provider of credit cards to Middle America customers throughout the U.S. By combining experience, analysis, technology and outstanding customer service, Providian seeks to build long-lasting relationships with its customers by providing products and services that meet their evolving financial needs.

Certain statements contained in this press release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the "safe harbor" created by those sections. Forward-looking statements include, without limitation: expressions of "belief," "anticipation," or "expectations" of management; statements as to industry trends or future results of operations of the Company and its subsidiaries; and other statements that are not historical fact. Forward-looking statements are based on certain assumptions by management and are subject to risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These risks and uncertainties include, but are not limited to, competitive pressures; factors that affect delinquency rates, credit loss rates and charge-off rates; general economic conditions; consumer loan portfolio growth; changes in the cost and/or availability of funding due to changes in the deposit, credit or securitization markets; changes in the way the Company is perceived in such markets and/or conditions relating to existing or future financing commitments; the effect of government policy and regulation, whether of general applicability or specific to the Company, including restrictions and/or limitations relating to the Company’s minimum capital requirements, deposit taking abilities, reserving methodologies, dividend policies and payments, growth, and/or underwriting criteria; year-end audit adjustments; changes in accounting rules, policies, practices and/or procedures; the success of product development efforts; legal and regulatory proceedings, including the impact of ongoing litigation; interest rates; one-time charges; extraordinary items; the ability to recruit and replace key personnel; and the impact of existing, modified, or new strategic initiatives. These and other risks and uncertainties are described in detail in the Company’s Annual Report on Form 10-K and Annual Report to Stockholders for the fiscal year ended December 31, 2002 under the headings "Cautionary Statement Regard Forward-Looking Information "and "Risk Factors." Readers are cautioned not to place undue reliance on any forward-looking statement, which speaks only as of the date thereof. The Company undertakes no obligation to update any forward-looking statements.

NOTE: Investor information is available on Providian Financial’s website at www.providian.com.


                       Providian Financial Corporation
                       Financial & Statistical Summary
                         Reported Financial Measures
                                 (unaudited)

     (dollars in millions, except
       per share and employee data)

                    2003          2003         2003        2002          2002
                     Q3            Q2           Q1          Q4            Q3
    Reported
     Earnings:
     Net Interest
      Income        $80.9       $127.8       $180.4       $186.2      $199.5
     Non-Interest
      Income        445.4        393.3        417.5        293.1       465.1
      Total Net
       Revenue      526.3        521.1        597.9        479.3       664.6
     Provision
      for
      Loan Losses    98.7        132.0        261.8        139.0       192.4
    Non-Interest
     Expense        286.6        324.6        328.3        320.3       452.2
    Income From
     Operations
     Before
     Income Taxes   141.0         64.5          7.8         20.0        20.0
    Income Tax
     Expense
     (Benefit)       55.7         25.5          3.1          7.9      (22.1)
      Net Income    $85.3        $39.0         $4.7        $12.1       $42.1

    Reported
     Financial Data:
     Quarter:
      Net Credit
       Losses (1)    $156         $237         $296         $299        $244
      Provision
       for Credit
       Losses         $99         $132         $262         $139        $192
     Quarter End:
      Total Loans  $5,994       $6,417       $7,147       $6,908      $8,198
      Total
       Assets     $15,329      $16,206      $16,607      $16,651     $17,218
      Total
       Equity      $2,257       $2,181       $2,134       $2,139      $2,131
     Quarter
      Average:
      Total Loans  $5,866       $6,684       $7,500       $8,046      $7,305
      Earning
       Assets     $12,869      $14,048      $13,604      $14,236     $15,011
      Total
       Assets     $15,740      $16,460      $16,518      $16,757     $17,384
      Total
       Equity      $2,198       $2,161       $2,088       $2,100      $2,107
    Key Reported
     Statistics:
     Net Interest
      Margin
      (Earning
      Assets)       2.51%        3.64%        5.30%        5.23%       5.32%
     Net Interest
      Margin
      (Loans)       8.87%       10.16%       11.50%       11.02%      12.93%
     Risk-
      Adjusted
      Margin
      (Loans) (2)  28.61%       19.51%       17.98%       10.71%      25.02%
     Non-interest
      Income
      Margin (3)   30.38%       23.54%       22.27%       14.57%      25.47%
     Return on
      Assets        2.17%        0.95%        0.11%        0.29%       0.97%
     Return on
      Equity       15.52%        7.23%        0.90%        2.31%       8.00%
     Allowance
      as a
      Percent of
      Loans        10.74%       12.20%       13.69%       14.67%      15.26%
     Net Credit
      Loss Rate (1)10.65%       14.19%       15.79%       14.88%      13.38%
     Delinquency
      Rate
      (30+ Days)    7.18%        7.64%        8.76%       10.00%       8.14%
     Equity to
      Loans        37.65%       33.99%       29.86%       30.96%      25.99%
     Equity to
      Assets       14.72%       13.46%       12.85%       12.85%      12.38%
    Common Share
     Statistics:
     Earnings Per
      Common Share
      - Basic       $0.30        $0.14        $0.02        $0.04       $0.15

     Earnings
      Per Common
      Share -
      Assuming
      Dilution (4)  $0.29        $0.13        $0.02        $0.04       $0.15

    Book Value
     Per Share
     (Period End)   $7.78        $7.51        $7.36        $7.39       $7.37
    Total Market
     Capitalization
     (Period End)  $3,421       $2,689       $1,901       $1,878      $1,417
    Shares
     Outstanding
     (Period End)   290.2        290.4        289.8        289.4       289.2
    Weighted
     Average
     Shares O/S
     - Basic        287.6        286.3        286.2        285.4       285.3
    Weighted
     Average
     Shares O/S
     - Diluted      291.9        289.8        290.4        289.2       294.1

    Accounts         10.8         11.4         11.7         12.0        12.7
    Employees
     (FTE)          5,012        5,692        6,083        6,261       7,331


    (1) The net credit losses for the second quarter of 2003 exclude the fair
        value adjustments on loans held for securitization or sale.

    (2) Represents reported interest income on loans plus non-interest income,
        less interest expense allocated to loans, and less net credit losses,
        expressed as a percentage of average reported loans.

    (3) Represents reported non-interest income expressed as a percentage of
        average reported loans.


                       Providian Financial Corporation
                       Financial & Statistical Summary
                          Managed Financial Measures
                                 (unaudited)

      (dollars in millions)         2003     2003     2003     2002     2002
                                     Q3       Q2       Q1       Q4       Q3
    Managed Net Revenue:
        Net Interest Income        $590.7   $649.5   $705.5   $734.6   $779.8
        Non-Interest Income         386.4    394.3    430.9    283.8    444.1
            Total Net Revenue(1)    977.1  1,043.8  1,136.4  1,018.4  1,223.9
    Managed Financial Data:
      Quarter:
        Net Credit Losses(2)         $607     $760     $835     $838     $804
        Net Change in Reported
         Allowance for Credit
         Losses(3)                    (57)    (105)     (34)    (160)     (53)
        Adjusted Credit Losses       $550     $655     $801     $678     $751

      Quarter End:
        Total Loans(4)            $16,945  $17,798  $18,470  $19,628  $19,453
        Securitized Loans(5)      $10,951  $11,381  $11,323  $12,720  $11,255
        Total Assets(6)           $23,779  $25,131  $25,532  $26,484  $26,893
        Total Equity               $2,257   $2,181   $2,134   $2,139   $2,131
      Quarter Average:
        Total Loans               $16,891  $18,045  $18,952  $19,344  $19,237
        Securitized Loans(5)      $11,026  $11,361  $11,452  $11,294  $11,932
        Earning Assets            $23,894  $25,409  $25,056  $25,534  $26,942
        Total Assets              $24,462  $25,385  $25,494  $26,222  $27,511
        Total Equity               $2,198   $2,161   $2,088   $2,100   $2,107
    Key Managed Statistics:

        Net Interest Margin
         (Earning Assets)(7)        9.89%   10.22%   11.26%   11.51%   11.58%
        Net Interest Margin
         (Loans)(8)                14.79%   15.09%   15.41%   15.67%   16.73%
        Risk-Adjusted Margin
         (Loans)(9)                 9.57%    6.99%    6.89%    4.20%    9.25%
        Non-interest Income
         Margin(10)                 9.15%    8.74%    9.09%    5.87%    9.23%
        Return on Assets            1.40%    0.62%    0.07%    0.18%    0.61%
        Net Credit Loss Rate(2)    14.37%   16.84%   17.61%   17.34%   16.71%
        Delinquency Rate
         (30+ Days)                 9.68%    9.72%   10.31%   11.11%   11.23%
        Equity to Managed Loans    13.32%   12.25%   11.55%   10.90%   10.95%
        Equity to Managed Assets    9.49%    8.68%    8.36%    8.08%    7.92%


    (1) Represents the interest income and non-interest income earned from
        managed loans receivable and investments less interest expense,
        including the interest costs payable to securitization investors.
    (2) The net credit losses for the second quarter 2003 exclude the fair
        value adjustments on loans held for securitization or sale.
    (3) The net change in the reported allowance for credit losses excludes
        the allowance transferred to loans held for securitization or sale.
    (4) Represents all loans receivable from customer accounts that are
        managed by the Company, including the loans receivable reported on the
        Company’s statements of financial condition and the loans receivable
        removed or reclassified from the Company’s statements of financial
        condition through securitizations. Loans receivable amounts exclude
        estimated uncollectible finance charges and fees.
    (5) Effective December 2002, the Company adopted the federal banking
        agencies accrued interest receivable, or AIR, guidance, resulting in a
        reclassification of a portion of accrued interest receivable from
        reported loans receivable to due from securitizations for 2003 and for
        the fourth quarter 2002. Securitized loans for 2003 and the fourth
        quarter 2002 reflect the AIR reclassification.
    (6) Managed assets represent total assets reported on the Company’s
        statements of financial condition, plus the loans receivable removed
        or reclassified from loans receivable on its statements of financial
        condition through securitizations, less the retained interests from
        securitizations reported on its statement of financial condition.
    (7) Represents the net interest income recognized on managed earning
        assets, expressed as a percentage of managed  average earning assets.
    (8) Represents the interest income recognized on managed average loans
        receivable, expressed as a percentage of managed average loans
        receivable, less interest expense on deposits and borrowings,
        including the interest costs payable to securitization investors,
        expressed as a percentage of managed average earning assets.
    (9) Represents managed interest income on loans plus non-interest income,
        less interest expense allocated to loans, and less net credit losses,
        expressed as a percentage of average managed loans.
   (10) Represents managed non-interest income expressed as a percentage of
        average managed loans.  Managed non-interest income excludes the
        interest income reclassification related to certain retained
        beneficial interests.


                         Providian Financial Corporation
                               Delinquency Summary
                                   (unaudited)
                                    Quarterly

                                    2003                       2003
    (dollars in thousands)           Q3                         Q2 (4)
                                          % of                         % of
                                           Total                      Total
                            Loans          Loans       Loans          Loans
    Reported
     Loans
      outstanding(1)(2) $5,994,446       100.00%   $6,418,050       100.00%
     Loans delinquent
      30 - 59 days        $138,168         2.31%     $156,615         2.44%
      60 - 89 days          97,361         1.62%      115,372         1.80%
      90 or more days      194,822         3.25%      218,116         3.40%

       Total              $430,351         7.18%     $490,103         7.64%

    Securitized
     Loans
      outstanding (3)  $10,951,709                $11,381,475
     Loans delinquent
      30 - 59 days        $382,647                   $377,089
      60 - 89 days         275,898                    291,690
      90 or more days      552,222                    571,358

       Total            $1,210,767                 $1,240,137

    Managed
     Loans
      outstanding (1)  $16,946,155       100.00%  $17,799,525       100.00%
     Loans delinquent
      30 - 59 days        $520,815         3.07%     $533,704         3.00%
      60 - 89 days         373,259         2.20%      407,062         2.29%
      90 or more days      747,044         4.41%      789,474         4.43%

       Total            $1,641,118         9.68%   $1,730,240         9.72%


                         Providian Financial Corporation
                               Delinquency Summary
                                   (unaudited)
                                    Quarterly

                                                             2003
    (dollars in thousands)                                    Q1

                                                                  % of Total
                                                     Loans           Loans
    Reported
     Loans outstanding (1) (2)                    $7,145,817        100.00%
     Loans delinquent
      30 - 59 days                                  $173,449          2.43%
      60 - 89 days                                   136,652          1.91%
      90 or more days                                315,630          4.42%

       Total                                        $625,731          8.76%


    Securitized
     Loans outstanding (3)                       $11,323,170
     Loans delinquent
      30 - 59 days                                  $353,358
      60 - 89 days                                   283,102
      90 or more days                                642,045

       Total                                      $1,278,505


    Managed
     Loans outstanding (1)                       $18,468,987        100.00%
     Loans delinquent
      30 - 59 days                                  $526,807          2.85%
      60 - 89 days                                   419,754          2.27%
      90 or more days                                957,675          5.19%

       Total                                      $1,904,236         10.31%


                         Providian Financial Corporation
                               Delinquency Summary
                                   (unaudited)
                                    Quarterly

                                     2002                      2002
     (dollars in thousands)           Q4                        Q3

                                            % of                       % of
                                           Total                      Total
                             Loans         Loans        Loans         Loans
    Reported
     Loans
      outstanding (1)(2)$6,899,849       100.00%   $8,185,724       100.00%
     Loans delinquent
      30 - 59 days        $205,605         2.98%     $243,298         2.97%
      60 - 89 days         147,057         2.13%      166,733         2.04%
      90 or more days      336,979         4.89%      256,676         3.13%

       Total              $689,641        10.00%     $666,707         8.14%

    Securitized
     Loans
      outstanding (3)  $12,719,752                $11,255,146
     Loans delinquent
      30 - 59 days        $460,295                   $432,957
      60 - 89 days         335,700                    335,712
      90 or more days      694,129                    747,759

       Total            $1,490,124                 $1,516,428

    Managed
     Loans
      outstanding (1)  $19,619,601       100.00%  $19,440,870       100.00%
     Loans delinquent
      30 - 59 days        $665,900         3.39%     $676,255         3.48%
      60 - 89 days         482,757         2.46%      502,445         2.58%
      90 or more days    1,031,108         5.26%    1,004,435         5.17%

       Total            $2,179,765        11.11%   $2,183,135        11.23%

(1) Balances exclude market value adjustment related to the fair value of designated financial instruments during 2003 of $(0.8) million for the third quarter, $(1.3) million for the second quarter and $0.8 million for the first quarter. For 2002, $7.9 million and $12.1 million were excluded for the fourth and third quarters, respectively.

(2) Effective December 2002, the Company adopted the federal banking agencies’ accrued interest receivable, or AIR, guidance, resulting in a reclassification of a portion of accrued interest receivable from reported loans receivable to due from securitizations for the first, second, and third quarters of 2003 and the fourth quarter of 2002.

(3) Excludes the senior seller’s interest in the loans receivable transferred in securitizations. The senior seller’s interest is an undivided interest in the loans transferred to the securitization trust and is included in reported loans receivable. Effective December 2002, the Company adopted the accrued interest receivable, or AIR, guidance, resulting in a reclassification of a portion of accrued interest receivable from reported loans receivable to due from securitizations for 2003 and for the fourth quarter of 2002. Securitized loans for 2003 and the fourth quarter of 2002 reflect the AIR reclassification.

(4) Includes Providian Bank loans held for securitization or sale at fair value. Excluding the Providian Bank loans held for securitization or sale from the second quarter 30+ days delinquency rates would have increased the managed rate from 9.72% to 9.90% and the reported rate from 7.64% to 7.93%.


                       Providian Financial Corporation
                         Allowance for Credit Losses

                                    Three months ended     Nine months ended
                                      September 30,          September 30,
    (dollars in thousands)           2003        2002      2003        2002

    Balance at beginning of
     period                      $701,488  $1,224,901  $1,012,461  $1,932,833
    Provision for credit losses    98,732     192,366     480,676     764,600
    Fair value adjustment -
     loans available for sale          --          --      11,875     388,230
    Credit losses                (206,654)   (278,437)   (847,629) (1,035,763)
    Recoveries                     50,416      34,008     158,205     108,881
    Credit losses on loans
     available for sale                --          --    (171,606)   (985,943)
    Balance at end of period     $643,982  $1,172,838    $643,982  $1,172,838


                       Providian Financial Corporation
    September 2003 Reported Monthly Net Credit Loss and Delinquency Rates

Providian Financial Corporation’s reported net credit loss rate for the month ended September 30, 2003 and its 30+ day reported delinquency rate as of September 30, 2003 are presented in the table below. Reported monthly net credit loss and delinquency rates exclude the impact of loans receivable removed or reclassified from loans receivable on the Company’s balance sheet through its securitizations.

    Monthly Net Credit Loss Rate(1)(3)(4)    30+ Day Delinquency Rate(2)(3)(4)
       (Annualized) (Unaudited)                       (Unaudited)

                 9.55%                                    7.18%

    (1) Represents the principal amounts of reported loans receivable that
        have been charged off, less the total amount of recoveries on
        previously charged-off loans, expressed as a percentage of the average
        reported loans receivable during the period, multiplied by 12.
        Recoveries include proceeds from the sale of charged-off assets to
        third parties. Total average reported loans exclude a decrease of
        $0.9 million for market value adjustments related to the fair value
        of designated financial instruments.
    (2) Represents reported loans that are 30+ days past due as of the last
        day of the monthly period, divided by the total reported loans as of
        the last day of the monthly period. Total reported loans exclude a
        decrease of $0.8 million for market value adjustments related to the
        fair value of designated financial instruments.
    (3) In August 2003, in connection with the migration to the Total Systems
        2 servicing platform, which increased the functionality of its data
        system, the Company modified its practice for recognizing the
        charge-off of bankruptcy accounts.  Previously, the Company batch
        processed bankruptcy accounts and charged-off the related amounts once
        a month.  With the change, the Company now charges off bankrupt
        accounts on a daily basis, generally 30 days after notification of the
        bankruptcy. This change continues to be within the guidelines provided
        by the Federal Financial Institutions Examination Council. The Company
        estimates the change had the effect of reducing the monthly net credit
        loss rate by approximately 96 basis points and increasing the 30+ day
        delinquency rate by approximately 6 basis points in September 2003.
    (4) In September, the Company modified its loan re-aging practices.
        Previously, an account could qualify for re-aging if the customer paid
        the minimum amount due in each of three consecutive monthly payment
        cycles.  With the change instituted in September, an account may also
        qualify for re-aging when the customer pays the cumulative equivalent
        amount within a three-payment cycle period. This change is also
        consistent with the guidelines provided by the Federal Financial
        Institutions Examination Council. This change had the effect of
        reducing the monthly net credit loss rate by approximately 4 basis
        points and reducing the 30+ day delinquency rate by approximately
        18 basis points in September 2003.


     Providian Financial Corporation and Subsidiaries
     Consolidated Statements of Financial Condition

                                                September 30,     December 31,
    (dollars in thousands)                          2003             2002
                                                (unaudited)
    Assets
       Cash and cash equivalents                  $516,479          $344,277
       Federal funds sold and securities
         purchased under resale agreements       3,845,824         3,601,000
       Investment securities:
          Available-for-sale                     1,463,451         1,856,607
       Loans receivable, less allowance
        for credit losses of $643,982
        at September 30, 2003 and
        $1,012,461 at December 31, 2002          5,349,684         5,895,296
       Premises and equipment, net                  95,602           119,260
       Interest receivable                          43,430            60,841
       Due from securitizations                  3,178,223         3,723,382
       Deferred tax                                225,012           487,529
       Other assets                                611,055           562,738
              Total assets                     $15,328,760       $16,650,930

    Liabilities
       Deposits                                $11,180,345       $12,662,077

       Short-term borrowings                       108,793            91,529
       Long-term borrowings                      1,153,219           864,048
       Deferred fee revenue                        116,574           211,978
       Accrued expenses and
        other liabilities                          513,207           577,894
              Total liabilities                 13,072,138        14,407,526

    Capital securities                                  --           104,332

    Shareholders’ equity                         2,256,622         2,139,072
              Total liabilities and
               shareholders’ equity            $15,328,760       $16,650,930


     Providian Financial Corporation and Subsidiaries
     Consolidated Statements of Income (unaudited)

                                    Three months ended    Nine months ended
    (dollars in thousands,             September 30,         September 30,
     except per share data)           2003      2002       2003        2002

    Interest Income
         Loans                      $200,777  $328,240   $758,857  $1,166,807
         Federal funds sold and
          securities purchased
          under resale agreements     10,562    13,334     33,998      26,041
         Other                        24,445    46,902     86,800     132,356
    Total interest income            235,784   388,476    879,655   1,325,204

    Interest Expense
         Deposits                    139,470   178,705    453,845     559,746
         Borrowings                   15,437    10,306     36,774      32,338
    Total interest expense           154,907   189,011    490,619     592,084
              Net interest income     80,877   199,465    389,036     733,120

    Provision for credit losses       98,732   192,366    492,551   1,152,830

                Net interest (loss)
                 income after
                 provision
                 for credit losses   (17,855)    7,099   (103,515)   (419,710)

    Non-Interest Income
         Servicing and
          securitizations            261,086   125,057    614,402     570,247
         Credit product fee income   173,427   273,548    593,234     904,675
         Other                        10,953    66,503     48,683     613,355
                                     445,466   465,108  1,256,319   2,088,277

    Non-Interest Expense
         Salaries and employee
          benefits                    90,050   129,341    282,881     433,219
         Solicitation and
          advertising                 38,523   126,404    157,428     339,275
         Occupancy, furniture, and
          equipment                   31,571    43,765     91,661     179,520
         Data processing and
          communication               31,064    39,621     94,531     133,615
         Other                        95,380   113,035    312,969     402,955
                                     286,588   452,166    939,470   1,488,584
              Income from continuing
               operations before
               income taxes          141,023    20,041    213,334     179,983
    Income tax expense (benefit)      55,704   (22,084)    84,267      41,093
              Income from continuing
               operations after tax   85,319    42,125    129,067     138,890
    Income from discontinued
     operations - net of related
     taxes                                --        --         --      67,156
              Net Income             $85,319   $42,125   $129,067    $206,046
    Earnings per common share -
     basic
    Income from continuing
     operations                        $0.30     $0.15      $0.45       $0.49
    Income from discontinued
     operations - net of related
     taxes                                --        --         --        0.23
    Earnings per common share -
     basic                             $0.30     $0.15      $0.45       $0.72
    Earnings per common share -
     assuming dilution
    Income from continuing
     operations                        $0.29     $0.15      $0.45       $0.49
    Income from discontinued
     operations - net of related
     taxes                                --        --         --        0.23
    Earnings per common share -
     assuming dilution                 $0.29     $0.15      $0.45       $0.72

    Weighted average common shares
      outstanding - basic (000)      287,620   285,323    286,783     284,649

    Weighted average common shares
      outstanding - assuming
       dilution (000)                291,871   294,094    289,969     293,935


                       Providian Financial Corporation
                      Bank Subsidiaries’ Capital Ratios
         Total Risk-Based Capital Ratios as of September 30, 2003(1)

                                                 Providian         Providian
                                               National Bank          Bank


    Call Report Basis(2)                            17.07%            84.87%
    Applying Subprime Guidance (excluding
     AIR)(3)                                        15.40%            81.41%
    Applying Subprime Guidance (including
     AIR)(4)                                        13.68%               --


    (1) Total risk-based capital (Tier 1 + Tier 2) divided by total risk-based
        assets.
    (2) Total risk-based capital ratios as shown on the September 30, 2003
        Call Report and includes accrued interest receivable.
    (3) Total risk-based capital ratios after applying the increased risk
        weightings under the Expanded Guidance for Subprime Lending Programs
        ("Subprime Guidance").  Excludes the effect of adopting the regulatory
        guidance on the accrued interest receivable asset. Providian Bank is
        not affected by the accrued interest receivable guidance.
    (4) Total risk-based capital ratios after applying the increased risk
        weightings under the Subprime Guidance.  Includes the effect of
        adopting the regulatory guidance on the accrued interest receivable
        asset. Providian Bank is not affected by the accrued interest
        receivable guidance.


                        Providian Financial Corporation
                        Financial & Statistical Summary
           Reconciliation of Reported and Managed Financial Measures

                                             Reported   Securitiza-  Managed
                                               2003        tion        2003
       (dollars in millions)                  QTR 03    Adjustment    QTR 03
       Earnings:
              Interest Income Loans           $200.8      $562.3      $763.1
              Interest Income Investments (1)   35.0       (11.4)       23.6
              Interest Expense                 154.9        41.1       196.0
                  Net Interest Income          $80.9      $509.8      $590.7
              Non-Interest Income  (1)         445.4       (59.0)      386.4
                  Total Net Revenue           $526.3      $450.8      $977.1


       Financial Data:
          Quarter:
              Net Credit Losses (2)             $156        $451        $607
                                                                          --
          Quarter End:
              Total Loans  (3)                $5,994     $10,951     $16,945
              Total Assets                   $15,329      $8,450     $23,779
          Quarter Average:
              Total Loans                     $5,866     $11,025     $16,891

              Earning Assets                 $12,869     $11,025     $23,894
              Total Assets                   $15,740      $8,722     $24,462


                        Providian Financial Corporation
                        Financial & Statistical Summary
           Reconciliation of Reported and Managed Financial Measures

                                             Reported  Securitiza-    Managed
                                               2003       tion         2003
       (dollars in millions)                  QTR 02    Adjustment    QTR 02
       Earnings:
              Interest Income Loans           $247.7      $581.9       $829.6
              Interest Income Investments (1)   43.9       (14.7)        29.2
              Interest Expense                 163.8        45.5        209.3
                  Net Interest Income         $127.8      $521.7       $649.5
              Non-Interest Income  (1)         393.3         1.0        394.3
                  Total Net Revenue           $521.1      $522.7     $1,043.8


       Financial Data:
          Quarter:
              Net Credit Losses (2)             $237        $523         $760
                                                                           --
          Quarter End:
              Total Loans  (3)                $6,417     $11,381      $17,798
              Total Assets                   $16,206      $8,925      $25,131
          Quarter Average:
              Total Loans                     $6,684     $11,361      $18,045

              Earning Assets                 $14,048     $11,361      $25,409
              Total Assets                   $16,460      $8,925      $25,385


                        Providian Financial Corporation
                        Financial & Statistical Summary
           Reconciliation of Reported and Managed Financial Measures

                                             Reported  Securitiza-     Managed
                                               2003       tion          2003
       (dollars in millions)                  QTR 01    Adjustment     QTR 01
       Earnings:
              Interest Income Loans           $310.3      $586.0       $896.3
              Interest Income Investments (1) 41.9       (13.0)        28.9
              Interest Expense                 171.8        47.9        219.7
                  Net Interest Income         $180.4      $525.1       $705.5
              Non-Interest Income  (1)         417.5        13.4        430.9
                  Total Net Revenue           $597.9      $538.5     $1,136.4


       Financial Data:
          Quarter:
              Net Credit Losses (2)             $296        $539         $835
                                                                           --
          Quarter End:
              Total Loans  (3)                $7,147     $11,323      $18,470
              Total Assets                   $16,607      $8,925      $25,532
          Quarter Average:
              Total Loans                     $7,500     $11,452      $18,952

              Earning Assets                 $13,604     $11,452      $25,056
              Total Assets                   $16,518      $8,976      $25,494


                        Providian Financial Corporation
                        Financial & Statistical Summary
           Reconciliation of Reported and Managed Financial Measures

                                              Reported   Securitiza-  Managed
                                               2002       tion          2002
       (dollars in millions)                  QTR 04    Adjustment     QTR 04
       Earnings:
              Interest Income Loans           $323.5      $613.2       $936.6
              Interest Income Investments (1)   42.6        (8.6)        34.1
              Interest Expense                 179.9        56.2        236.1
                  Net Interest Income         $186.2      $548.4       $734.6
              Non-Interest Income  (1)         293.1        (9.3)       283.8
                  Total Net Revenue           $479.3      $539.1     $1,018.4


       Financial Data:
          Quarter:
              Net Credit Losses (2)             $299        $539         $838

          Quarter End:
              Total Loans  (3)                $6,908     $12,720      $19,628
              Total Assets                   $16,651      $9,833      $26,484
          Quarter Average:
              Total Loans                     $8,046     $11,294      $19,344

              Earning Assets                 $14,236     $11,298      $25,534
              Total Assets                   $16,757      $9,465      $26,222


                        Providian Financial Corporation
                        Financial & Statistical Summary
           Reconciliation of Reported and Managed Financial Measures

                                           Reported   Securitiza-    Managed
                                             2002        tion          2002
       (dollars in millions)                QTR 03    Adjustment      QTR 03
       Earnings:
              Interest Income Loans           $328.2      $656.2       $984.4
              Interest Income Investments (1)   60.3       (13.2)        47.1
              Interest Expense                 189.0        62.7        251.7
                  Net Interest Income         $199.5      $580.3       $779.8
              Non-Interest Income  (1)         465.1       (21.0)       444.1
                  Total Net Revenue           $664.6      $559.3     $1,223.9


       Financial Data:
          Quarter:
              Net Credit Losses (2)             $244        $559         $804

          Quarter End:
              Total Loans  (3)                $8,198     $11,255      $19,453
              Total Assets                   $17,218      $9,675      $26,893
          Quarter Average:
              Total Loans                     $7,305     $11,932      $19,237

              Earning Assets                 $15,011     $11,932      $26,942
              Total Assets                   $17,384     $10,127      $27,511


     (1)  In November 1999, the Emerging Issues Task Force (EITF) of the FASB
          issued EITF 99-20, "Recognition of Interest Income and Impairment on
          Purchased and Retained Beneficial Interests in Securitized Financial
          Assets." This Pronouncement requires that the holders of retained
          beneficial interests in securitized financial assets, such as the
          Company, recognize a portion of securitization (non-interest) income
          as interest income. EITF 99-20 became effective for fiscal quarters
          beginning after March 15, 2001.

     (2) The net credit losses for the second quarter of 2003 exclude the fair
         value adjustments on loans held for securitization or sale.

     (3) During the second quarter of 2003 loans outstanding include loans
         held for securitization or sale recorded at fair market value.

     Our new book of business comprises 18% of our total managed loans and 50%
     of our reported loans.

     Non-GAAP Managed Financial Information
     Loans that have been securitized and sold to third party investors are
     not considered to be our assets under GAAP and therefore are not shown
     on our balance sheet. However, the interests we retain in the securitized
     loan pools create financial exposure to the current and expected cash
     flows of the securitized loans. Although the loans sold are not on our
     balance sheet, their performance can affect some or all of our retained
     interests as well as our results of operations and our financial
     position. In addition, we continue to service these loans.

     Because of this continued exposure and involvement, we use managed
     financial information to evaluate our historical performance, assess our
     current condition, and plan our future operations. We believe that
     managed financial information supplements our GAAP information and is
     helpful to the reader’s understanding of our consolidated financial
     condition and results of operations. "Reported" financial information
     refers to GAAP financial information. "Managed" financial information is
     derived by adjusting the reported financial information to add back
     securitized loan balances and the related finance charge and fee income,
     credit losses, and net interest costs.

     The Company in its October 29, 2003 earnings call will be disclosing
     certain projected financial measures relating to expected performance on
     a managed basis, such as net credit losses, net interest income margin
     and non-interest income margin.  The Company develops such projections on
     a managed basis using managed financial information and does not in the
     normal course derive comparable GAAP projections.  Developing such
     comparable GAAP projections would be unreasonably burdensome and in the
     opinion of management such comparable GAAP projections would not provide
     to the users of the financial information a significant benefit in
     understanding the Company’s expected future performance.

SOURCE Providian Financial Corporation

CONTACT: investors, Jack Carsky, +1-415-278-4977, or Bill Horning, +1-415-278-4602, or media, Alan Elias, +1-415-278-4189, or Beth Haiken, +1-415-278-4889, all of Providian Financial Corporation

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