SAN FRANCISCO, April 24 /PRNewswire-FirstCall/ -- Providian Financial
Corporation (NYSE: PVN) today announced net income for the first quarter of
2003 of $4.7 million, or $0.02 per diluted share, compared to net income of
$10.0 million, or $0.03 per diluted share, in the first quarter of 2002.
"We are pleased with our performance this quarter which was in line with
our expectations despite the uncertain economic environment," said
Joseph Saunders, Providian's chairman and chief executive officer. "This
quarter we made solid progress on our primary focus of improving the credit
quality of our portfolio, as well as continued success in our new account
efforts and infrastructure improvements. We are certainly encouraged by the
positive trends we are seeing and are focused on the diligent pursuit of our
long term goals."
First Quarter Highlights
Total net revenues on a reported basis, comprised of reported net interest
income and reported non-interest income, totaled $597.9 million in the first
quarter of 2003, compared to $1,438.5 million in the first quarter of 2002.
Total net revenues on a managed basis, comprised of net interest income and
non-interest income from both reported and securitized loans, totaled
$1,136.4 million in the first quarter of 2003, compared to $2,041.5 million in
the first quarter of 2002. The decline in both reported and managed revenue in
the first quarter of 2003, as compared with the first quarter of 2002, was
primarily driven by a reduction in reported and managed receivables due to
credit losses and asset dispositions in 2002. The reported and managed net
interest margins on loans in the first quarter of 2003 were 11.50% and 15.41%,
compared to 11.56% and 14.45% in the first quarter of 2002, respectively.
Net credit losses in the first quarter of 2003 came in modestly better
than the Company's expectations at $296.1 million on a reported basis and
$834.5 million on a managed basis, resulting in reported and managed net
credit loss rates of 15.79% and 17.61%, respectively. These net credit loss
rates compare to reported and managed net credit loss rates in the fourth
quarter of 2002 of 14.88% and 17.34%, respectively. The Company's reported
and managed 30+ day delinquency rates at the end of the first quarter of 2003
were 8.76% and 10.31%, respectively, compared to 10.00% and 11.11%,
respectively, at the end of the fourth quarter of 2002.
Non-interest expense for the first quarter of 2003 was $328.3 million.
Total non-interest expense in the first quarter included solicitation and
advertising costs of $65.4 million. This compares to total non-interest
expense of $547.1 million in the comparable period of 2002.
Loans receivable, as of March 31, 2003, were $7.15 billion on a reported
basis and $18.47 billion on a managed basis. This compares to reported loans
receivable and managed loans receivable at December 31, 2002 of $6.91 billion
and $19.63 billion, respectively. Managed loans receivable decreased in the
first quarter due to net credit losses and a seasonal increase in payments.
The Company added approximately 600,000 new accounts in the first quarter of
2003 and ended the quarter with approximately 11.7 million customer accounts.
The Company ended the first quarter of 2003 with total equity, including
capital securities, of $2.24 billion and an allowance for credit losses of
$978.2 million, which together represent 45% of reported loans and 17% of
managed loans. Cash and investments ended the quarter at approximately
$6.6 billion, representing approximately 92% of reported loans and
approximately 36% of managed loans.
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 and deposit products to 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. One of
America's largest bankcard issuers, Providian has over $7 billion in reported
receivables and over $18 billion in managed receivables and more than
11 million customer relationships.
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 http://www.providian.com
PROVIDIAN FINANCIAL CORPORATION
FINANCIAL & STATISTICAL SUMMARY
REPORTED FINANCIAL MEASURES
(unaudited)
(in millions, except per 2003 2002 2002 2002 2002
share and employee data) Q1 Q4 Q3 Q2 Q1
Reported Earnings:
Net Interest Income $180.4 $186.2 $199.5 $208.4 $325.3
Non-Interest Income 417.5 293.1 465.1 509.9 1,113.2
Total Net Revenue 597.9 479.3 664.6 718.3 1,438.5
Provision for Loan Losses 261.8 139.0 192.4 80.4 880.1
Non-Interest Expense 328.3 320.3 452.2 489.3 547.1
Income From Operations
Before Taxes 7.8 20.0 20.0 148.6 11.3
Tax Expense (Benefit) 3.1 7.9 (22.1) 58.7 4.5
Income From Operations $4.7 $12.1 $42.1 $89.9 $6.8
Income from Discontinued
Operations (A) -- -- -- 64.0 3.2
Net Income $4.7 $12.1 $42.1 $153.9 $10.0
Reported Financial Data:
Quarter:
Net Credit Losses $296 $299 $244 $269 $413
Quarter End:
Total Loans $7,147 $6,908 $8,198 $7,513 $9,913
Total Assets $16,607 $16,710 $17,218 $17,799 $18,729
Total Capital (Includes
Capital Securities) $2,239 $2,243 $2,235 $2,185 $1,994
Total Equity $2,134 $2,139 $2,131 $2,081 $1,890
Quarter Average:
Total Loans $7,500 $8,046 $7,305 $7,578 $11,758
Earning Assets $13,604 $14,236 $15,011 $14,243 $16,427
Total Assets $16,518 $16,757 $17,384 $18,319 $19,275
Total Equity $2,088 $2,100 $2,107 $2,008 $1,962
Key Reported Statistics:
Net Interest Margin
(Earning Assets) 5.30% 5.23% 5.32% 5.85% 7.92%
Net Interest Margin
(Loans) 11.50% 11.02% 12.93% 13.00% 11.56%
Risk-Adjusted Margin
(Loans) (B) 17.98% 10.71% 25.02% 25.70% 35.39%
Return on Assets 0.11% 0.29% 0.97% 3.36% 0.21%
Return on Equity 0.90% 2.31% 8.00% 30.64% 2.04%
Allowance as a Percentage
of Loans 13.69% 14.67% 15.26% 16.34% 17.06%
Net Credit Loss Rate 15.79% 14.88% 13.38% 14.21% 14.04%
Delinquency Rate (30+Days) 8.76% 10.00% 8.14% 7.29% 8.32%
Equity to Assets 12.85% 12.80% 12.38% 11.69% 10.09%
Common Share Statistics:
EPS Basic:
EPS - Continuing
Operations $0.02 $0.04 $0.15 $0.32 $0.02
EPS - Discontinued
Operations (A) -- -- -- 0.22 0.01
EPS - Basic $0.02 $0.04 $0.15 $0.54 $0.03
EPS - Diluted: (C)
EPS - Continuing
Operations $0.02 $0.04 $0.15 $0.31 $0.02
EPS - Discontinued
Operations (A) -- -- -- 0.22 0.01
EPS - Assuming Dilution $0.02 $0.04 $0.15 $0.53 $0.03
Book Value Per Share
(Period End) $7.36 $7.39 $7.37 $7.20 $6.54
Total Market Capitalization
(Period End) $1,901 $1,878 $1,417 $1,700 $2,181
Shares Outstanding
(Period End) 289.8 289.4 289.2 289.1 288.9
Weighted Average Shares
O/S - Basic 286.2 285.4 285.3 284.2 283.9
Weighted Average Shares
O/S - Diluted 290.4 289.2 294.1 294.2 288.5
Accounts 11.7 12.0 12.7 12.9 15.0
Employees (FTE) 6,083 6,261 7,331 8,393 10,153
(A) The Company decided to discontinue its operations in Argentina and the
United Kingdom in 2001 and completed the disposition of those
operations in the second quarter 2002. Accordingly, the assets,
liabilities, and operating results of its foreign subsidiaries and
branches in those locations are reflected as discontinued operations
in the statements of financial condition and statements of income.
(B) Represents reported interest income on loans expressed as a percentage
of average reported loans, less reported interest expense expressed as
a percentage of average earning assets, less reported credit losses
expressed as a percentage of average reported loans plus reported
non-interest income expressed as a percentage of average reported
loans.
(C) During the first quarter 2003, and the first and fourth quarters 2002,
there was no interest expense add-back because the effect would be
antidilutive. During the second and third quarters 2002, $2 million
of interest expense related to the 3.25% Convertible Notes was added
back to income.
PROVIDIAN FINANCIAL CORPORATION
FINANCIAL & STATISTICAL SUMMARY
MANAGED FINANCIAL MEASURES
(unaudited)
2003 2002 2002 2002 2002
(in millions) Q1 Q4 Q3 Q2 Q1
Managed Net Revenue:
Net Interest Income $705.5 $734.6 $779.8 $783.2 $962.4
Non-Interest Income 430.9 283.8 444.1 532.6 1,079.1
Total Net Revenue (A) 1,136.4 1,018.4 1,223.9 1,315.8 2,041.5
Managed Financial Data:
Quarter:
Net Credit Losses $835 $838 $804 $867 $1,016
Quarter End:
Total Loans (B) $18,470 $19,628 $19,453 $19,639 $22,144
Securitized Loans (C) $11,323 $12,720 $11,255 $12,126 $12,231
Total Assets (D) $25,532 $26,543 $26,893 $28,014 $28,994
Total Equity $2,134 $2,139 $2,131 $2,081 $1,890
Quarter Average:
Total Loans $18,952 $19,344 $19,237 $19,773 $27,003
Securitized Loans (C) $11,452 $11,294 $11,932 $12,195 $15,246
Earning Assets $25,056 $25,534 $26,942 $26,438 $31,673
Total Assets $25,494 $26,222 $27,511 $28,576 $32,667
Total Equity $2,088 $2,100 $2,107 $2,008 $1,962
Key Managed Statistics:
Net Interest Margin
(Earning Assets) (E) 11.26% 11.51% 11.58% 11.85% 12.15%
Net Interest Margin
(Loans) (F) 15.41% 15.67% 16.73% 16.38% 14.45%
Risk-Adjusted Margin
(Loans) (G) 6.89% 4.20% 9.25% 9.62% 15.38%
Return on Assets 0.07% 0.18% 0.61% 2.15% 0.12%
Net Credit Loss Rate 17.61% 17.34% 16.71% 17.53% 15.05%
Delinquency Rate
(30+ Days) 10.31% 11.11% 11.23% 10.16% 10.22%
Equity to Managed Assets 8.36% 8.06% 7.92% 7.43% 6.52%
(A) 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.
(B) 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.
(C) 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 to Due From
Securitizations for the first quarter 2003 and the fourth quarter
2002. Securitized loans for the first quarter 2003 and the fourth
quarter 2002 include the AIR reclassification.
(D) 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 statement of financial
condition through securitizations, less the retained interests from
securitizations reported on its statement of financial condition.
(E) Represents the net interest income earned from our managed earning
assets, expressed as a percentage of managed average earning assets.
(F) Represents the interest income earned from our managed 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.
(G) Represents managed interest income on loans expressed as a percentage
of average managed loans, less reported interest expense plus interest
costs payable to securitization investors expressed as a percentage of
average managed earning assets, less managed credit losses expressed
as a percentage of average managed loans plus managed non-interest
income expressed as a percentage of average managed loans.
PROVIDIAN FINANCIAL CORPORATION
DELINQUENCY SUMMARY
(unaudited)
Quarterly
2003 2002
(dollars in thousands) Q1 Q4
% of % of
Total Total
Loans Loans Loans Loans
Reported
Loans outstanding (A) (B) $7,145,817 100.00% $6,899,849 100.00%
Loans delinquent
30 - 59 days $173,449 2.43% $205,605 2.98%
60 - 89 days 136,652 1.91% 147,057 2.13%
90 or more days 315,630 4.42% 336,979 4.89%
Total $625,731 8.76% $689,641 10.00%
Securitized
Loans outstanding (C) $11,323,170 $12,719,752
Loans delinquent
30 - 59 days $353,358 $460,295
60 - 89 days $283,102 $335,700
90 or more days $642,045 $694,129
Total $1,278,505 $1,490,124
Managed
Loans outstanding (A) $18,468,987 100.00% $19,619,601 100.00%
Loans delinquent
30 - 59 days $526,807 2.85% $665,900 3.39%
60 - 89 days 419,754 2.27% 482,757 2.46%
90 or more days 957,675 5.19% 1,031,108 5.26%
Total $1,904,236 10.31% $2,179,765 11.11%
2002 2002
(dollars in thousands) Q3 Q2
% of % of
Total Total
Loans Loans Loans Loans
Reported
Loans outstanding (A) (B) $8,185,724 100.00% $7,495,030 100.00%
Loans delinquent
30 - 59 days $243,298 2.97% $209,450 2.79%
60 - 89 days 166,733 2.04% 139,787 1.87%
90 or more days 256,676 3.13% 197,206 2.63%
Total $666,707 8.14% $546,443 7.29%
Securitized
Loans outstanding (C) $11,255,146 $12,125,831
Loans delinquent
30 - 59 days $432,957 $435,944
60 - 89 days $335,712 $311,924
90 or more days $747,759 $699,078
Total $1,516,428 $1,446,946
Managed
Loans outstanding (A) $19,440,870 100.00% $19,620,861 100.00%
Loans delinquent
30 - 59 days $676,255 3.48% $645,394 3.29%
60 - 89 days 502,445 2.58% 451,711 2.30%
90 or more days 1,004,435 5.17% 896,284 4.57%
Total $2,183,135 11.23% $1,993,389 10.16%
2002
(dollars in thousands) Q1
Loans % of Total Loans
Reported
Loans outstanding (A) (B) $10,881,235 100.00%
Loans delinquent
30 - 59 days $286,575 2.63%
60 - 89 days 206,075 1.89%
90 or more days 413,163 3.80%
Total $905,813 8.32%
Securitized
Loans outstanding (C) $12,230,652
Loans delinquent
30 - 59 days $383,750
60 - 89 days $303,679
90 or more days $768,364
Total $1,455,793
Managed
Loans outstanding (A) $23,111,887 100.00%
Loans delinquent
30 - 59 days $670,325 2.90%
60 - 89 days 509,754 2.21%
90 or more days 1,181,527 5.11%
Total $2,361,606 10.22%
(A) Excludes the increase in loans receivable resulting from the fair
value of designated financial instruments.
(B) 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 to Due From
Securitizations during the first quarter 2003 and the fourth quarter
2002.
(C) Excludes the seller's interest in the loans receivable transferred to
the trust. The senior seller's interest is an undivided interest in
the trust and is included in reported loans receivable.
Providian Financial Corporation and Subsidiaries
Condensed Consolidated Statements of Financial Condition
March 31, Dec. 31,
(dollars in thousands) 2003 2002
(unaudited)
Assets
Cash and cash equivalents $490,063 $344,277
Federal funds sold and securities
purchased under resale agreements 4,226,000 3,601,000
Investment securities:
Available-for-sale 1,849,754 1,856,607
Loans receivable, less allowance
for credit losses of $978,202
at March 31, 2003 and $1,012,461
at December 31, 2002 6,168,418 5,895,296
Premises and equipment, net 108,891 119,260
Interest receivable 58,408 60,841
Due from securitizations 3,015,631 3,723,382
Deferred tax 425,949 487,529
Other assets 263,538 622,197
Total assets $16,606,652 $16,710,389
Liabilities
Deposits $12,592,713 $12,708,315
Short-term borrowings 108,722 91,560
Long-term borrowings 760,167 877,238
Deferred fee revenue 170,605 211,978
Accrued expenses and other liabilities 735,705 577,894
Total liabilities 14,367,912 14,466,985
Capital securities 104,332 104,332
Shareholders' equity 2,134,408 2,139,072
Total liabilities and
shareholders' equity $16,606,652 $16,710,389
Providian Financial Corporation and Subsidiaries
Condensed Consolidated Statements of Income (unaudited)
Three months ended March 31,
(dollars in thousands, except per share data) 2003 2002
Interest Income
Loans $310,340 $488,085
Federal funds sold and securities
purchased under resale agreements 9,826 5,609
Other 32,033 38,641
Total interest income 352,199 532,335
Interest Expense
Deposits 161,222 195,303
Borrowings 10,623 11,752
Total interest expense 171,845 207,055
Net interest income 180,354 325,280
Provision for credit losses 261,815 880,079
Net interest income after
provision for credit losses (81,461) (554,799)
Non-Interest Income
Servicing and securitizations 190,588 320,360
Credit product fee income 200,193 344,927
Other 26,757 447,893
417,538 1,113,180
Non-Interest Expense
Salaries and employee benefits 96,975 165,018
Solicitation and advertising 65,378 108,682
Occupancy, furniture, and equipment 28,683 53,232
Data processing and communication 30,670 49,286
Other 106,602 170,866
328,308 547,084
Income from continuing operations
before income taxes 7,769 11,297
Income tax (benefit) expense 3,069 4,462
Income from continuing operations
after tax 4,700 6,835
Income from discontinued operations - net
of related taxes -- 3,184
Net Income $4,700 $10,019
Earnings per common share - basic
Income from continuing operations $0.02 $0.02
Income (loss) from discontinued operations
- net of related taxes -- 0.01
Net Income $0.02 $0.03
Earnings per common share - diluted
Income from continuing operations $0.02 $0.02
Income (loss) from discontinued operations
- net of related taxes -- 0.01
Net Income $0.02 $0.03
Weighted average common shares outstanding
- basic (000) 286,187 283,893
Weighted average common shares outstanding
- assuming dilution (000) 290,429 288,540
PROVIDIAN FINANCIAL CORPORATION
BANKING SUBSIDIARIES' CAPITAL RATIOS
Total Risk-Based Capital Ratios as of March 31, 2003 (A)
Providian Providian
National Bank Bank
Call Report Basis (B) 14.60% 20.50%
Subprime Guidance Basis (excluding AIR) (C) 12.99% 12.42%
Subprime Guidance Basis (including AIR) (D) 11.24% 12.42%
(A) Total risk-based capital (Tier 1 + Tier 2) divided by total
risk-weighted assets.
(B) Total risk-based capital ratios as shown on the March 31, 2003 Call
Report and includes accrued interest receivable.
(C) 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.
(D) 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 Securitization Managed
2003 2003
(dollars in millions) QTR 01 Adjustment Qtr 01
Earnings:
Interest Income Loans $310.3 $586.0 $896.3
Interest Income Investments (A) 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 (A) 417.5 13.4 430.9
Total Net Revenue 597.9 $538.5 $1,136.4
Financial Data:
Quarter:
Net Credit Losses $296 $539 $835
Quarter End:
Total Loans $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
Reported Securitization Managed
2002 2002
(dollars in millions) Q4 Adjustment Q4
Earnings:
Interest Income Loans $323.5 $613.2 $936.6
Interest Income Investments (A) 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 (A) 293.1 (9.3) 283.8
Total Net Revenue $479.3 $539.1 $1,018.4
Financial Data:
Quarter:
Net Credit Losses $299 $539 $838
Quarter End:
Total Loans $6,908 $12,720 $19,628
Total Assets $16,710 $9,833 $26,543
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
Reported Securitization Managed
2002 2002
(dollars in millions) Q3 Adjustment Q3
Earnings:
Interest Income Loans $328.2 $656.2 $984.4
Interest Income Investments (A) 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 (A) 465.1 (21.0) 444.1
Total Net Revenue $664.6 $559.3 $1,223.9
Financial Data:
Quarter:
Net Credit Losses $244 $559 $804
Quarter End:
Total Loans $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
Reported Securitization Managed
2002 2002
(dollars in millions) Q2 Adjustment Q2
Earnings:
Interest Income Loans $350.5 $654.5 $1,005.0
Interest Income Investments (A) 53.9 (14.7) 39.2
Interest Expense 196.0 65.0 261.0
Net Interest Income 208.4 574.8 783.2
Non-Interest Income (A) 509.9 22.7 532.6
Total Net Revenue $718.3 $597.5 $1,315.8
Financial Data:
Quarter:
Net Credit Losses $269 $598 $867
Quarter End:
Total Loans $7,513 $12,126 $19,639
Total Assets $17,799 $10,215 $28,014
Quarter Average:
Total Loans $7,578 $12,195 $19,773
Earning Assets $14,243 $12,195 $26,438
Total Assets $18,319 $10,257 $28,576
Reported Securitization Managed
2002 2002
(dollars in millions) Q1 Adjustment Q1
Earnings:
Interest Income Loans $488.1 $738.9 $1,227.0
Interest Income Investments (A) 44.2 (13.5) 30.7
Interest Expense 207.0 88.3 295.3
Net Interest Income 325.3 637.1 962.4
Non-Interest Income (A) 1,113.2 (34.1) 1,079.1
Total Net Revenue $1,438.5 $603.0 $2,041.5
Financial Data:
Quarter:
Net Credit Losses $413 $603 $1,016
Quarter End:
Total Loans $9,913 $12,231 $22,144
Total Assets $18,729 $10,265 $28,994
Quarter Average:
Total Loans $11,758 $15,246 $27,003
Earning Assets $16,427 $15,246 $31,673
Total Assets $19,275 $13,392 $32,667
(A) 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.
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 April 24, 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
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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, +1-415-278-4770, all of
Providian Financial Corporation
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