Capital Plan Accepted by Banking Regulators
SAN FRANCISCO, Feb. 7 /PRNewswire-FirstCall/ --
Providian Financial Corporation (NYSE: PVN) today announced a net loss per
share from continuing operations for the fourth quarter of $1.39, or a net
loss of $395.3 million, inclusive of additions to reserves and charges
outlined below. This result compares to reported net income from continuing
operations of $225.1 million, or $0.76 per share, for the fourth quarter of
2000. For the full year, the Company reported earnings from continuing
operations totaling $141.4 million, or $0.49 per share, compared to
$684.0 million, or $2.34 per share in 2000. All earnings per share figures are
reported on a diluted basis.
The Company also announced the acceptance of its bank subsidiaries'
Capital Plan by banking regulators. The Capital Plan provides a comprehensive
plan and strategy for establishing and maintaining a strong capital position
at the Company's subsidiary banks. The Company is committed to meeting the
goals of this plan, including a commitment to maintaining strong levels of
liquidity and reserves. The plan reflects strategic asset sales as previously
announced, an origination strategy designed to achieve an attractive mix of
new business originated from both the middle and prime segments, and increased
liquidity along with a reduction in the level of deposit funding. Consistent
with these measures, on February 5, 2002, the Company closed the sale of the
Providian Master Trust to JPMorgan Chase. The sale of the Trust resulted in
an after tax gain of over $300 million and cash proceeds of over $2.7 billion.
As previously announced, the Company also strengthened its liquidity position
with the completion of more than $2.8 billion of securitization transactions
in December.
"Reaching agreement with our regulators on our Capital Plan is an
important step in moving the Company forward," said Joseph Saunders,
Providian's president and chief executive officer. "The reserves we
established and charges we took this quarter position us with a strong balance
sheet and with capital and reserves that provide substantial coverage for our
managed loans. These actions represent a disciplined approach and are an
essential part of positioning the company to move forward on a solid financial
footing."
The Company's fourth quarter financial results reflect actions taken by
its bank subsidiaries in light of portfolio delinquency and loss trends and
economic conditions, along with actions taken pursuant to the Company's
previously announced five-point strategic plan to improve its financial
position and rebuild shareholder value. These actions are consistent with the
Capital Plan approved by the regulators, including the provisions in the plan
relating to the establishment of loan loss reserves. The financial actions
taken during the quarter include:
-- A net addition of $252 million to the allowance for loan losses
bringing aggregate reserves to over $1.9 billion, reflecting an
appropriate estimation of the losses inherent in the Company's loan
portfolio taking into account the sequential increase in the reported
net credit loss rate from 10.47% to 12.23% in the fourth quarter and
assuming continued deterioration of the economy.
-- A $134 million net charge related to securitization transactions
completed during the fourth quarter in which the Company retained
subordinated interests. Had the Company not securitized in the
quarter, it would not have released reserves relating to these assets
and a similar amount would have been established in the allowance for
loan losses.
-- A $303 million charge to increase the reserve for the estimated
uncollectible portion of finance charges and fees posted on customer's
accounts in the total managed portfolio to an aggregate amount of
$505 million. This reflects adding reserves for fees and finance
charges associated with loans that are less than 90 days delinquent.
The Company has also established a policy of not accruing for the
estimated uncollectible portion of fees and finance charges on managed
loans. The Company believes that these policies represent a
conservative position in relation to the credit card industry as a
whole.
-- A $164 million charge related to a change in economic and performance
expectations which affect the valuation of its residual securitization
interests.
-- A $133 million charge primarily related to the estimated losses from
the devaluation of the Argentine peso and the reclassification of the
Company's Argentine operations as discontinued in light of our desire
to sell it.
-- A $35 million charge primarily related to the closing of an operations
facility in Henderson, Nevada and a writedown of goodwill and
intangibles associated with the Company's 1999 purchase of GetSmart.
Also, in the fourth quarter, the company contributed cash of $260 million
to increase the regulatory capital of its subsidiary banks. In order to
enhance operational efficiencies, the Company expects to combine its two
banking subsidiaries and their servicing company affiliate, pending the normal
regulatory approval process. The merger of Providian Bank into Providian
National Bank, if approved by regulators, would not affect FDIC-insured
deposits at either institution.
Capital and Liquidity
After giving effect to these financial actions, the Company's subsidiary
banks continue to maintain high levels of capital. As of December 31, 2001,
the Company's principal banking subsidiary, Providian National Bank, was
adequately capitalized and on a pro forma basis giving effect to the sale of
the Providian Master Trust would have been well capitalized under applicable
banking regulations.
Under the Capital Plan, the Company's banking subsidiaries have committed
to maintain well-capitalized status as shown in their Call Reports beginning
in 2002. In addition, they have committed to achieve by March 31, 2002, a
total risk-based capital ratio of at least 8% after applying increased risk
weightings consistent with the Expanded Guidance for Subprime Lending Programs
("Subprime Guidance") issued by the regulators in 2001, and to achieve by
June 30, 2003 a total risk-based capital ratio of at least 10% after
application of Subprime Guidance risk weightings. As applied by the Banks at
year end 2001, the Subprime Guidance risk-weighting methodology resulted in a
risk weighting of approximately 174% against Middle and Standard assets for
purposes of calculating total risk weighted assets. Prime assets continue to
be weighted at 100%.
The Company believes that the capital goals established under the Capital
Plan are readily achievable. With the sale of the Providian Master Trust and
the completion of other initiatives currently underway, the Company expects
the Banks on a combined basis to achieve a total risk-based capital ratio of
at least 10% after applying the Subprime Guidance risk weightings reflected in
the Capital Plan. Projected asset growth along with projected growth in
certain asset classes associated with the Company's securitizations may result
in the Banks' total risk-based capital ratio falling below this level in some
future quarters. However, the Company currently projects that it will
generate sufficient internal capital to meet its June 30, 2003 capital goal,
and that the Banks will continue to be well-capitalized on a Call Report
basis. The Plan also includes a number of contingency actions (including
additional asset sales and equity initiatives) that could be pursued if
necessary to meet the Bank's capital goals established under the plan.
The Company ended the year with total capital of $2.0 billion and reserves
for loan losses and uncollectible finance charges and fees of $2.4 billion,
which combined represent 34% of on-balance sheet receivables and 13% of
managed receivables. The Company's liquidity stood at $3.2 billion at the end
of the year. On a pro forma basis as of year end 2001, the sale of the
Providian Master Trust would have increased the Company's capital by over $300
million, cash and investments would have increased by over $2.7 billion and
total reserves and capital would have represented approximately 36% of on-
balance sheet receivables and 14% of managed receivables.
Strategic Review
The Company's business plan calls for a strategic focus on the middle and
prime market segments and projects a profit for full year 2002, excluding any
gains or losses related to asset dispositions.
"We are working on longer term marketing strategies and expense reduction
initiatives that will allow us to capitalize on our core competitive
advantages and return to growth and profitability," added Saunders. "I am
very pleased with the progress we have made to restructure the Company in what
has been a relatively short time period. We have reached significant
milestones on a number of key initiatives and the enhanced management team is
eager to move forward."
Since the Company announced its five-point strategic plan on
October 18, 2001, it has taken the following actions:
-- Completed over $2.8 billion of securitization transactions
-- Completed the sale of the Providian Master Trust to JP Morgan Chase
-- Announced the intent to sell its credit card business in the United
Kingdom, which is progressing on schedule, as well as the planned
disposition of its operations in Argentina (both of which have been
designated as discontinued businesses)
-- Announced the exploration of a sale of approximately $3 billion of
higher-risk credit card receivables, alternative strategies for which
are still under exploration
-- Reached an agreement with its regulators for managing capital and
growth
-- Discontinued all marketing to the standard market segment, tightened
credit line increases across all segments and selectively re-priced
loans that have exhibited increased risk levels
-- Closed the Henderson, Nevada operations facility, resulting in annual
operating expense savings of approximately $18 million
-- Announced additional workforce reductions of approximately
800 positions, resulting in annualized cost savings of approximately
$42 million
-- Hired Joseph Saunders as the Company's President and Chief Executive
Officer
-- Strengthened its executive management team by hiring Warren Wilcox as
Vice Chairman, Planning and Marketing and Susan Gleason as Vice
Chairman, Operations and Systems, and promoting Jim Jones to Vice
Chairman, Credit and Collections
The Company's marketing initiatives during the quarter reflected the
implementation of its five-point strategic plan, including slower growth,
exiting the standard market and refocusing marketing efforts on the most
profitable segments of the market. For the quarter, the Company added 500,000
net new accounts, bringing total customer accounts to 18.4 million at
year-end. For the full year, the Company added 2.3 million net new accounts,
a 14% increase over 2000. Approximately 3.6 million total accounts will be
sold in the first quarter of 2002 as a result of the sale of the Providian
Master Trust and the pending sale or liquidation of the Company's
international assets.
Financial Results
Total managed credit card loans grew by $950 million in the fourth quarter
and ended the year at $32.7 billion, a 21% gain over year-end 2000. A large
portion of the loan growth during the quarter was in the Company's middle
market segment and is reflective of the Company's decision to focus a greater
portion of its marketing dollars in this area while discontinuing marketing to
the standard (higher risk) market.
During the quarter, the Company increased its reserve coverage to include
the estimated uncollectible portion of accrued finance charges and fees for
all credit card receivables, including those that are current. The Company
previously established a similar reserve for receivables that were delinquent
more than 90 days. This expansion of reserve coverage decreased finance
charges and non-interest income in the fourth quarter by $121.7 million and
$181.4 million, respectively. Commencing January 2002, the Company ceased
accruing the estimated uncollectible portion of finance charges and fees for
all managed loans.
For the full year 2001, total managed revenue rose 9% to $6.3 billion.
Total managed revenue was $1.22 billion in the fourth quarter, a 26% decrease
from the fourth quarter of 2000, reflecting the charges taken during the
quarter and the discontinuance of marketing to the standard (higher risk)
market. The managed net interest margin was 12.31% for the fourth quarter of
2001 and 12.78% for the full year, and would have been higher if not for the
addition to the reserve for uncollectible accrued finance charges. The Company
expects some near-term margin benefit from the sale of the Providian Master
Trust, although a rising interest rate environment could mitigate this effect.
The managed net credit loss rate was 12.70% in the fourth quarter and
10.78% for the full year. The Company expects that in addition to the
anticipated increase in the managed net charge off rate due to the change in
portfolio composition and seasoning, the sale of the lower loss rate
receivables in the Providian Master Trust will result in a significant
increase in the managed net credit loss rate going forward. The 30+ day
managed delinquency rate was 8.81% at year-end 2001. These portfolio
delinquency and loss trends and trends in the general economy were reflected
in the Company's addition to the loan loss reserve of $252 million during the
fourth quarter, bringing the total loan loss reserve to $1.93 billion at year-
end. This represented 16.76% of reported loans, which compares to 12.24% at
the end of the third quarter of 2001 and 10.59% at year-end 2000. The Company
believes that the expected increase in credit losses is appropriately
considered in its reserves and that credit quality deterioration will be
mitigated, in part, by actions the Company is taking to manage its portfolio.
The Company's non-interest expense was $2.3 billion for the full-year
2001, compared to $2.4 billion in 2000. For the fourth quarter 2001, the
non-interest expense was $597 million and included the aforementioned one-time
charges totaling $35 million. The Company is continuing to identify various
avenues for cost savings and plans to significantly lower its overall cost
structure over the course of 2002.
"I am pleased with the progress that Providian has made this past quarter
in addressing the challenges it faces and am optimistic regarding the
achievability of the goals and projections which are set forth in our capital
plan," added Saunders. "I recognize there is still much hard work ahead and
risks in execution that we should not underestimate. However, the reserves we
have established, the capital goals we have set, and the strategies we have
developed for booking an attractive mix of new business consistent with the
Company's core strengths and expertise, all combine to create a strong new
foundation for Providian. The new Providian will be a different Company than
the old, one with stronger capital and reserves, with slower and more cautious
growth, and with what I hope will be a steady and more predictable level of
profitability. We will be back to the market in due course with a more
detailed discussion of our strategy."
San Francisco-based Providian Financial is a leading provider of lending
and deposit products to customers throughout the United States. The Company
has more than $32 billion in managed receivables and more than 18 million
customers.
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,
and are subject to the "safe harbor" created by those sections.
Forward-looking statements include expressions of "belief," "anticipation," or
"expectations" of management, statements as to industry trends or future
results of operations of the Company, 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, liquidity 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 in which the Company is perceived in such markets, and/or conditions
relating to existing or future financing commitments; the effects of
government policy and regulation, whether of general applicability or specific
to the company, including restrictions and/or limitations on the company's
minimum capital requirements, deposit taking abilities, reserve methodologies,
dividend policies and payments, growth, and/or underwriting criteria; year-end
audit adjustments; changes in accounting rules, policies, practices and/or
procedures; product development; legal and regulatory proceedings, including
the impact of ongoing litigation; interest rates; acquisitions; one-time
charges; extraordinary items; the ability to attract and retain key personnel;
the impact of existing, modified or new strategic initiatives; and
international factors. These and other risks and uncertainties are described
in detail in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000 under the heading "Cautionary Statements." 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.
The financial information included in this press release is unaudited.
Audited financials information, together with management's discussion and
analysis of financial condition and results of operations, will be set forth
in the Company's Annual Report on Form 10-K for the year ended
December 31, 2001.
NOTE: Investor information is available on Providian Financial's web site
at http://www.providian.com.
PROVIDIAN FINANCIAL CORPORATION (PVN)
FINANCIAL & STATISTICAL SUMMARY
EXCLUDING DISCONTINUED OPERATIONS
(unaudited)
(in millions, except per share and employee data)
2001 2001 2001 2001 2000
Q4 Q3 Q2 Q1 Q4
Earnings
(Managed Basis) :
Net Interest
Income $990.9 $996.5 $949.1 $881.5 $829.2
Non-Interest
Income 224.4 687.1 783.4 782.1 820.8
Total
Revenue 1,215.3 1,683.6 1,732.5 1,663.6 1,650.0
Provision for
Loan Losses 1,272.0 977.5 749.4 714.8 658.0
Non-Interest
Expense 596.6 610.1 581.4 559.5 617.0
Income From
Operations
Before
Taxes (653.3) 96.0 401.7 389.3 375.0
Tax Expense (258.0) 37.9 158.6 153.7 150.0
Income
From
Operations $(395.3) $58.1 $243.1 $235.6 $225.0
Discontinued
Operations (85.9) (14.8) (10.7) (6.9) (11.0)
Extraordinary
Item-
Extinguishment
of Debt -- 13.9 -- -- --
Cumulative
Effect of
Accounting
Change -- -- -- 1.8 --
Net
Income $(481.2) $57.2 $232.4 $230.5 $214.0
Managed Financial Data:
Quarter End:
Credit
Cards $32,644 $31,693 $30,040 $28,106 $26,900
Home Loans 10 11 11 12 14
Total
Loans $32,654 $31,704 $30,051 $28,118 $26,914
Securitized
Loans $19,684 $17,940 $15,992 $13,905 $13,353
Total Assets $37,659 $38,201 $36,061 $33,219 $30,863
Total Capital
(Includes
Capital
Securities) $2,012 $2,496 $2,548 $2,318 $2,143
Total Equity $1,908 $2,390 $2,437 $2,207 $2,032
Quarter Average:
Credit Cards $32,103 $30,811 $28,903 $27,415 $25,002
Home Loans 13 11 12 14 22
Total
Loans $32,116 $30,822 $28,915 $27,429 $25,024
Securitized
Loans $18,001 $16,457 $14,648 $13,425 $11,662
Earning
Assets $36,324 $35,841 $32,338 $30,383 $28,689
Total Assets $37,627 $36,837 $34,245 $31,507 $29,556
Total Equity $2,251 $2,437 $2,319 $2,118 $1,923
Key Statistics:
Managed:
Net Interest
Margin
(Earning
Assets) 10.91% 11.12% 11.74% 11.60% 11.56%
Net Interest
Margin
(Loans) 12.31% 12.94% 13.14% 12.78% 13.12%
Risk-
Adjusted
Margin
(Loans) (A) 2.40% 11.43% 13.60% 14.82% 17.75%
Return on
Assets -5.12% 0.62% 2.71% 2.93% 2.90%
Return on
Equity -85.52% 9.40% 40.08% 43.52% 44.52%
Net Credit
Losses $1,020.0 $803.8 $750.6 $642.4 $531.0
Net Credit
Loss Rate 12.70% 10.43% 10.38% 9.37% 8.49%
Delinquency
Rate
(30+ Days) 8.81% 8.71% 8.07% 7.65% 7.54%
Equity to
Managed
Assets 5.07% 6.26% 6.76% 6.64% 6.58%
On Balance Sheet:
Allowance as
a Percent
of Loans 16.76% 12.24% 10.72% 10.61% 10.59%
Net Credit
Loss Rate 12.23% 10.47% 10.39% 9.69% 9.45%
Delinquency
Rate
(30+ Days) 7.58% 9.11% 8.93% 8.92% 9.02%
Common Share Statistics:
EPS Basic
EPS -
Continuing
Operations $(1.39) $0.20 $0.85 $0.83 $0.79
EPS -
Discontinued
Operations (0.31) (0.05) (0.03) (0.03) (0.04)
EPS -
Extraordinary
Item -- 0.05 -- -- --
EPS -
Cumulative
Effect of
Accounting
Change -- -- -- 0.01 --
EPS -
Basic $(1.70) $0.20 $0.82 $0.81 $0.75
EPS Diluted (B)
EPS -
Continuing
Operations $(1.39) $0.20 $0.82 $0.80 $0.76
EPS -
Discontinued
Operations (0.31) (0.05) (0.03) (0.03) (0.03)
EPS -
Extraordinary
Item -- 0.05 -- -- --
EPS -
Cumulative
Effect of
Accounting
Change -- -- -- 0.01 --
EPS -
Assuming
Dilution $(1.70) $0.20 $0.79 $0.78 $0.73
Book Value
Per Share
(Period End) $6.70 $8.41 $8.53 $7.74 $7.11
Total Market
Capitalization
(Period
End) $1,011 $5,727 $16,905 $13,990 $16,440
Shares
Outstanding
(Period End) 284.8 284.2 285.6 285.2 285.9
Weighted
Average
Shares O/S
- Basic 283.4 283.9 284.6 284.8 284.7
Weighted
Average
Shares O/S
- Diluted 283.4 295.0 297.6 298.0 297.7
Accounts 18.4 17.9 17.2 16.7 16.1
Employees
(FTE) 11,897 12,209 11,750 11,774 11,874
(A) Risk-adjusted margin is total loan revenue less credit losses as
a percentage of average managed loans.
(B) EPS - Diluted reflects an add-back of interest expense on 3.25%
Convertible Notes net of tax to net income of $2 million in all
quarters except QTR-4 2001.
PROVIDIAN FINANCIAL CORPORATION (PVN)
FINANCIAL & STATISTICAL SUMMARY
EXCLUDING DISCONTINUED OPERATIONS
2001 2000
(in millions, except per share and
employee data) Year End Year End
Earnings (Managed Basis) : (unaudited)
Net Interest Income $3,818.0 $2,931.2
Non-Interest Income 2,477.0 2,827.5
Total Revenue 6,295.0 5,758.7
Provision for Loan Losses 3,713.8 2,212.7
Non-Interest Expense 2,347.5 2,406.0
Income From Operations Before
Taxes 233.7 1,140.0
Tax Expense 92.3 456.0
Income From Operations $141.4 $684.0
Discontinued Operations (118.2) (32.2)
Extraordinary Item-
Extinguishment of Debt 13.9 --
Cumulative Effect of
Accounting Change 1.8 --
Net Income $38.9 $651.8
Managed Financial Data:
Quarter End:
Credit Cards $32,644 $26,900
Home Loans 10 14
Total Loans $32,654 $26,914
Securitized Loans $19,684 $13,353
Total Assets $37,659 $30,863
Total Capital (Includes
Capital Securities) $2,012 $2,143
Total Equity $1,908 $2,032
Quarter Average:
Credit Cards $29,822 $22,020
Home Loans 12 1,059
Total Loans $29,834 $23,079
Securitized Loans $15,646 $10,250
Earning Assets $33,742 $26,579
Total Assets $35,261 $27,590
Total Equity $2,286 $1,662
Key Statistics:
Managed:
Net Interest Margin (Earning
Assets) 11.31% 11.03%
Net Interest Margin (Loans) 12.78% 12.60%
Risk-Adjusted Margin (Loans)(A) 10.38% 17.13%
Return on Assets 0.11% 2.36%
Return on Equity 1.72% 39.21%
Net Credit Losses $3,216.8 $1,781.4
Net Credit Loss Rate 10.78% 7.72%
Delinquency Rate (30+ Days) 8.81% 7.54%
Equity to Managed Assets 5.07% 6.58%
On Balance Sheet:
Allowance as a Percent of
Loans 16.76% 10.59%
Net Credit Loss Rate 10.70% 8.35%
Delinquency Rate (30+ Days) 7.58% 9.02%
Common Share Statistics:
EPS Basic
EPS - Continuing Operations $0.50 $2.41
EPS - Discontinued Operations (0.42) (0.12)
EPS - Extraordinary Item 0.05 0.00
EPS -Cumulative Effect of
Accounting Change 0.01 0.00
EPS - Basic $0.14 $2.29
EPS Diluted (B)
EPS - Continuing Operations $0.49 $2.34
EPS - Discontinued Operations (0.42) (0.11)
EPS - Extraordinary Item 0.05 0.00
EPS -Cumulative Effect of
Accounting Change 0.01 0.00
EPS - Assuming Dilution $0.13 $2.23
Book Value Per Share (Period
End) $6.70 $7.11
Total Market Capitalization
(Period End) $1,011 $16,440
Shares Outstanding (Period
End) 284.8 285.9
Weighted Average Shares O/S -
Basic 284.3 284.2
Weighted Average Shares O/S -
Diluted 289.6 294.0
Accounts 18.4 16.1
Employees (FTE) 11,897 11,874
(A) Risk-adjusted margin is total loan revenue less credit losses as a
percentage of average managed loans.
(B) EPS - Diluted reflects an add-back of interest expenses on 3.25%
Convertible Notes net of tax to net income of $2 million except
the year-end 2001
PROVIDIAN FINANCIAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Financial Condition
(dollars in thousands)
December 31
2001 2000
Assets (unaudited)
Cash and cash equivalents $449,586 $430,554
Federal funds sold and securities
purchased under resale agreements 1,611,000 307,206
Investment securities:
Available-for-sale 1,324,465 1,885,474
Held-to-maturity -- 686,214
Loans held for securitization or sale 1,410,603 --
Loans receivable, less allowance
for credit losses of $1,932,833
at December 31, 2001 and $1,436,004
at December 31, 2000 9,626,307 12,124,720
Premises and equipment, net 183,829 177,344
Interest receivable 116,053 157,234
Due from securitizations 2,926,181 971,939
Deferred taxes 1,030,340 679,782
Other assets 521,159 400,967
Assets of discontinued operations 738,643 233,879
Total assets $19,938,166 $18,055,313
Liabilities
Deposits $15,318,165 $13,111,034
Short-term borrowings 117,176 15,243
Long-term borrowings 959,281 1,024,163
Deferred fee revenue 468,310 660,466
Accrued expenses and other liabilities 885,780 1,080,910
Liabilities of discontinued operations 177,611 20,257
Total liabilities 17,926,323 15,912,073
Capital Securities 104,332 111,057
Shareholders' equity 1,907,511 2,032,183
Total liabilities and
shareholders' equity $19,938,166 $18,055,313
PROVIDIAN FINANCIAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(dollars in thousands, except per share data)
Three months ended Twelve months ended
December 31 December 31
2001 2000 2001 2000
Interest Income: (unaudited) (undaudited)
Loans $493,941 $658,468 $2,393,389 $2,455,695
Federal funds sold
and securities
purchased under
resale agreements 6,408 17,769 41,928 85,899
Other 39,325 45,001 152,398 144,611
Total interest income 539,674 721,238 2,587,715 2,686,205
Interest Expense:
Deposits 217,876 214,358 872,977 812,982
Borrowings 12,572 14,512 61,332 61,797
Total interest expense 230,448 228,870 934,309 874,779
Net interest income 309,226 492,368 1,653,406 1,811,426
Provision for
credit losses 683,508 442,811 2,014,342 1,502,083
Net interest
income after
provision for
credit losses (374,282) 49,557 (360,936) 309,343
Non-interest Income:
Servicing and
securitizations (12,162) 305,206 853,444 855,305
Credit product
fee income 284,190 593,853 1,892,137 2,187,752
Other 45,512 43,321 196,612 193,612
317,540 942,380 2,942,193 3,236,669
Non-Interest Expense:
Salaries and
employee benefits 142,250 170,387 667,902 682,435
Solicitation and
advertising 167,750 170,447 615,427 525,542
Occupancy, furniture,
and equipment 65,548 45,450 222,169 158,825
Data processing
and communication 46,918 48,152 202,501 177,498
Other 174,104 182,453 639,511 861,720
596,570 616,889 2,347,510 2,406,020
Income from
continuing
operations before
income taxes (653,312) 375,048 233,747 1,139,992
Income tax expense
(credit) (258,059) 149,994 92,330 455,968
Income from
continuing
operations
after tax (395,253) 225,054 141,417 684,024
Loss from discontinued
operations -
net of tax (85,918) (11,048) (118,271) (32,262)
Extraordinary item
extinguishment of
debt - net of tax -- 13,905
Cumulative effect of
change in accounting
principle - net of tax -- 1,846
Net Income (481,171) 214,006 38,897 651,762
Earnings per share - basic
Income from continuing
operations $(1.39) $0.79 $0.50 $2.41
Loss from discontinued
operations -
net of tax (0.31) (0.04) (0.42) (0.12)
Extraordinary item
net of tax -- -- 0.05 --
Cumulative effect of
change in accounting
principle - net of tax -- -- 0.01 --
Net Income $(1.70) $0.75 $0.14 $2.29
Earnings per share - diluted
Income from continuing
operations $(1.39) $0.76 $0.49 $2.34
Loss from discontinued
operations -
net of tax (0.31) (0.03) (0.42) (0.11)
Extraordinary item -
net of tax -- -- 0.05 --
Cumulative effect of
change in accounting
principle - net of tax -- -- 0.01 --
Net Income $(1.70) $0.73 $0.13 $2.23
Cash dividends paid
per common share $-- $0.0300 $0.0900 $0.1050
Weighted average
common shares
outstanding - basic 283,401 284,747 284,299 284,174
Weighted average
common shares
outstanding -
assuming dilution 283,401 297,743 289,622 294,042
PROVIDIAN FINANCIAL CORPORATION (PVN)
DELINQUENCY SUMMARY
EXCLUDING DISCONTINUED OPERATIONS
Quarterly
2001 2001
(dollars in thousands) Q4 Q3
% of Total % of Total
Loans Loans Loans Loans
Reported
Loans outstanding (A) $12,939,877 100.00% $13,731,841 100.00%
Loans delinquent
30 - 59 days $376,145 2.91% $406,229 2.96%
60 - 89 days 249,709 1.93% 306,442 2.23%
90 or more days 354,407 2.74% 538,787 3.92%
Total $980,261 7.58% (C) $1,251,458 9.11% (B)
Managed
Loans outstanding (A) $32,623,551 100.00% $31,672,022 100.00%
Loans delinquent
30 - 59 days $934,113 2.87% $854,718 2.70%
60 - 89 days 666,416 2.04% 634,758 2.00%
90 or more days 1,272,335 3.90% 1,268,485 4.01%
Total $2,872,864 8.81% (C) $2,757,961 8.71% (B)
PROVIDIAN FINANCIAL CORPORATION (PVN)
DELINQUENCY SUMMARY
EXCLUDING DISCONTINUED OPERATIONS
Quarterly
2001 2001
(dollars in thousands) Q2 Q1
% of % of
Total Total
Loans Loans Loans Loans
Reported
Loans outstanding (A) $14,044,324 100.00% $14,206,559 100.00%
Loans delinquent
30 - 59 days $426,425 3.04% $368,503 2.59%
60 - 89 days 312,880 2.23% 289,726 2.04%
90 or more days 514,290 3.66% 609,430 4.29%
Total $1,253,595 8.93% $1,267,659 8.92%
Managed
Loans outstanding (A) $30,035,836 100.00% $28,111,704 100.00%
Loans delinquent
30 - 59 days $799,126 2.66% $636,617 2.26%
60 - 89 days 581,992 1.94% 483,764 1.72%
90 or more days 1,043,373 3.47% 1,030,658 3.67%
Total $2,424,491 8.07% $2,151,039 7.65%
PROVIDIAN FINANCIAL CORPORATION (PVN)
DELINQUENCY SUMMARY
EXCLUDING DISCONTINUED OPERATIONS
Quarterly
2000
(dollars in thousands) Q4
Loans % of Total Loans
Reported
Loans outstanding (A) $13,560,724 100.00%
Loans delinquent
30 - 59 days $411,173 3.03%
60 - 89 days 299,297 2.21%
90 or more days 512,142 3.78%
Total $1,222,612 9.02%
Managed
Loans outstanding (A) $26,913,382 100.00%
Loans delinquent
30 - 59 days $678,449 2.52%
60 - 89 days 482,246 1.79%
90 or more days 867,920 3.23%
Total $2,028,615 7.54%
Monthly
December November October
2001 2001 2001
Managed
Loans delinquent as a
percentage of loans
outstanding 8.81% 9.24% 8.95%
Net credit losses as a
percentage of average
loans outstanding 13.06% 12.87% 12.17%
(A) 2001 loans outstanding exclude SFAS No. 133 market value
adjustments
(B) Delinquency rates for the 3Q 2001 excluding the $85 million
charge to recognize the estimated uncollectible portion of
accrued finance charges and the increase of estimated
uncollectible fees are 9.54% and 8.90% for reported and
managed loans, respectively.
(C) Delinquency rates for the 4Q 2001 excluding the $254 million
charge to recognize the estimated uncollectible portion of
accrued finance charges and the increase of estimated
uncollectible fees are 9.36% and 9.51% for reported and
managed loans, respectively.
SOURCE Providian Financial Corporation
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Related links:
http://www.providian.com
CONTACT:
Investors, Jack Carsky, +1-415-278-4977, or
Bill Horning, +1-415-278-4602, or media, Alan Elias,
+1-415-278-4189, or Laurel Munson at 415-278-4770, all of
Providian Financial Corporation
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