SAN FRANCISCO, July 19 /PRNewswire/ -- Providian Financial Corporation
(NYSE: PVN) today announced 24% net income growth resulting in a 23% earnings
per share growth for the second quarter of 2001. Earnings totaled
$232.4 million, or $0.79 per diluted share, compared to earnings of
$187.6 million, or $0.64 per diluted share, for the second quarter of 2000,
before one-time adjustments.
During the second quarter, total customer accounts grew to 17.7 million, a
27% increase over the end of the second quarter of 2000, driven by new account
originations and continued strong customer retention. Total managed credit
card loans increased by $2.1 billion during the quarter to $30.5 billion, a
39% increase over the end of the second quarter of 2000.
"We are pleased with our continued growth and strengthening of our
consumer franchise, which enables us to deliver consistent returns to our
shareholders," said Shailesh Mehta, chairman and chief executive officer.
"This quarter, we are also honored to have been awarded the Rochester
Institute of Technology/USA Today Quality Cup for excellence in customer
service. This award is a tribute to the hard work and dedication of over
12,000 employees who have made Providian a nationally recognized leader in
customer satisfaction."
Total managed revenue, comprised of managed net interest income and
non-interest income, climbed to $1.76 billion in the second quarter of 2001, a
29% increase over the second quarter of 2000, before one-time adjustments. In
the second quarter, managed net interest income was $962.2 million and managed
non-interest income was $802.4 million, an increase of 40% and
18%, respectively, over the second quarter of 2000, before one-time
adjustments. The managed net interest margin on loans rose to 13.13% in the
second quarter of 2001 from 12.77% in the first quarter of 2001.
Consistent with the Company's expectations for the seasoning of the
portfolio and the rise in year-to-date consumer bankruptcies, the managed net
credit loss rate in the second quarter was 10.29% versus 9.34% in the
first quarter of 2001. The 30+ day managed delinquency rate was 8.04% at
quarter end, a slight increase from 7.64% at the end of the first quarter of
2001. Based on the trend in the 90+ day delinquency rate the Company continues
to expect an improved credit loss rate in the third quarter of 2001. The
Company's loan loss reserves totaled $1.53 billion at the end of the
second quarter, representing 10.55% of reported loans.
The Company's non-interest expense for the second quarter was
$621.6 million, leading to an improvement in the efficiency ratio to 35% for
the quarter from 37% in the second quarter of 2000, before one-time
adjustments, despite absorbing higher collection costs. The efficiency ratio
improvement was driven in part by continued cost savings from the integration
of the Company's credit card platforms.
The Company's return on managed assets was 2.71% and return on equity was
40.08% for the second quarter. The Company ended the quarter with a strong
balance sheet, with capital and loan loss reserves totaling $4.1 billion,
which represented 19.5% of reported assets and 11.3% of managed assets at
quarter end.
"Our financial results for the quarter demonstrate the strength of our
adaptive business model. Despite the more challenging economic environment, we
continue to deliver strong top-line growth and industry leading returns on
assets and equity," said David Petrini, vice chairman. "As we look out to the
balance of the year, we are well positioned to continue to produce solid
returns while maintaining our leadership position in customer satisfaction."
About Providian Financial
Winner of the 2001 Rochester Institute of Technology/USA Today Quality Cup
for excellence in customer service, San Francisco-based Providian Financial is
a leading provider of lending and deposit products to customers throughout the
U.S., and offers credit cards and deposit products in the UK and in Argentina.
Providian Financial has been named one of America's Most Admired Companies in
a survey by Fortune magazine, one of the nation's top financial institutions
by U.S. Banker magazine, and one of the most technologically innovative
companies in the U.S. by InformationWeek magazine. The Company has more than
$36 billion in assets under management and almost 18 million customer
accounts.
Statements contained herein as to the Company's expectations and goals are
forward looking statements under the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
projected. Among the significant risks and uncertainties are: competitive
pressures arising from aggressive competition from other consumer lenders;
factors that affect the delinquency rate on the Company's consumer loans and
the rate at which the Company's consumer loans are charged off; changes in the
cost and availability of funding due to changes in the deposit, credit or
securitization markets, or the way in which the Company is perceived in such
markets; the effects of government policy and regulation, including
restrictions and/or limitations arising from banking laws, regulations and
examinations; legal proceedings; and the ability to attract and retain key
personnel. More information on risk factors affecting the Company is available
in the Company's filings with the Securities and Exchange Commission,
including its annual report on Form 10-K, quarterly reports on Form 10-Q, and
current reports on Form 8-K.
NOTE: Investor information is available on Providian Financial's web site
at http://www.providian.com.
PROVIDIAN FINANCIAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Financial Condition
(dollars in thousands) (unaudited)
June 30 December 31
2001 2000
Assets
Cash and cash equivalents $1,213,647 $446,705
Federal funds sold and securities
purchased under resale agreements 1,851,200 307,206
Investment securities:
Available-for-sale 1,866,436 1,885,474
Held-to-maturity -- 686,214
Loans receivable, less allowance for
credit losses of $1,527,805 at
June 30, 2001 and $1,445,638 at
December 31, 2000 12,947,725 12,324,519
Premises and equipment, net 201,942 193,327
Interest receivable 143,685 158,633
Due from securitizations 1,529,898 971,939
Deferred taxes 612,729 679,782
Other assets 549,841 401,514
Total assets $20,917,103 $18,055,313
Liabilities
Deposits $15,389,486 $13,113,416
Short-term borrowings 81,689 18,744
Long-term borrowings 1,195,676 1,024,163
Deferred fee revenue 524,144 661,646
Accrued expenses and other liabilities 1,177,734 1,094,104
Total liabilities 18,368,729 15,912,073
Capital Securities 111,057 111,057
Shareholders' equity 2,437,317 2,032,183
Total liabilities and shareholders'
equity $20,917,103 $18,055,313
PROVIDIAN FINANCIAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(dollars in thousands, except per share data) (unaudited)
Three Months Ended Six Months Ended
June June
2001 2000 2001 2000
Interest Income
Loans $662,987 $594,145 $1,336,977 $1,170,871
Federal funds sold
and securities
purchased under
resale agreements 7,822 19,613 16,103 51,348
Other 36,417 39,821 74,714 59,259
Total interest income 707,226 653,579 1,427,794 1,281,478
Interest Expense
Deposits 219,236 201,425 424,703 387,312
Borrowings 17,108 15,446 36,690 34,217
Total interest expense 236,344 216,871 461,393 421,529
Net interest income 470,882 436,708 966,401 859,949
Provision for credit
losses 378,829 373,590 798,328 734,803
Net interest income
after provision for
credit losses 92,053 63,118 168,073 125,146
Non-Interest Income 913,610 823,804 1,798,867 1,551,344
Non-Interest Expense
Salaries and employee
benefits 188,034 173,335 370,830 348,315
Solicitation and
advertising 150,729 119,020 304,357 231,142
Occupancy, furniture,
and equipment 56,579 37,828 111,582 75,214
Data processing and
communication 56,950 44,690 111,778 85,308
Other 169,282 407,418 306,446 541,382
621,574 782,291 1,204,993 1,281,362
Income from operations
before income taxes 384,089 104,631 761,947 395,128
Income tax expense 151,729 41,859 300,969 158,038
Income from operations 232,360 62,772 460,978 237,090
Cumulative effect of
change in accounting
principle -- -- 1,846 --
Net Income $232,360 $62,772 $462,824 $237,090
Earnings per common
share -- basic $0.82 $0.22 $1.63 $0.84
Earnings per common
share -- assuming
dilution $0.79 $0.22 $1.57 $0.81
Cash dividends paid
per common share $0.0300 $0.0250 $0.0600 $0.0500
Weighted average common
shares outstanding
-- basic (000) 284,602 283,680 284,767 283,506
Weighted average common
shares outstanding
-- assuming
dilution (000) 297,601 291,582 297,993 290,982
PROVIDIAN FINANCIAL CORPORATION (PVN)
FINANCIAL & STATISTICAL SUMMARY
2001 2001 2000 2000 2000
Q2 Q1 Q4 Q3 Q2
(in millions, except
per share and employee data)
Earnings (Managed Basis): Adjusted Adjusted
(A) (A)
Net Interest Income $962.2 $889.3 $835.1 $761.3 $687.8
Non-Interest Income 802.4 794.7 825.5 620.2 680.2
Total Revenue 1,764.6 1,684.0 1,660.6 1,381.5 1,368.0
Provision for Loan
Losses 758.9 722.7 663.5 497.3 545.7
Non-Interest Expense 621.6 583.4 603.8 549.7 509.7
Income Before Taxes 384.1 377.9 393.3 334.5 312.6
Tax Expense 151.7 149.2 157.3 133.8 125.0
Income before effect
of accounting
change $232.4 $228.7 $236.0 $200.7 $187.6
Cumulative effect
of accounting change -- 1.8 -- -- --
Net Income $232.4 $230.5 $236.0 $200.7 $187.6
Managed Financial Data:
Quarter End:
Credit Cards $30,456 $28,393 $27,109 $24,130 $21,846
Home Loans 11 12 14 419 456
Total Loans $30,467 $28,405 $27,123 $24,549 $22,302
Securitized Loans $15,992 $13,905 $13,353 $10,284 $9,745
Total Assets $36,061 $33,219 $30,863 $28,717 $26,817
Total Capital
(Includes Capital
Securities) $2,548 $2,318 $2,143 $1,972 $1,742
Total Equity $2,437 $2,207 $2,032 $1,812 $1,582
Quarter Average:
Credit Cards $29,293 $27,673 $25,166 $22,959 $20,832
Home Loans 12 14 22 436 1,772
Total Loans $29,305 $27,687 $25,188 $23,395 $22,604
Securitized Loans $14,648 $13,425 $11,662 $9,992 $9,950
Earning Assets $32,748 $30,653 $28,868 $26,800 $26,136
Total Assets $34,245 $31,507 $29,556 $27,480 $27,532
Total Equity $2,319 $2,118 $1,923 $1,690 $1,588
Key Statistics:
Managed:
Net Interest
Margin (Earning
Assets) 11.75% 11.60% 11.57% 11.36% 10.53%
Net Interest
Margin (Loans) 13.13% 12.77% 13.13% 12.90% 12.05%
Risk-Adjusted
Margin (Loans)
(B) 13.79% 14.91% 17.76% 15.89% 16.67%
Return on Assets 2.71% 2.93% 3.19% 2.92% 2.72%
Return on Equity 40.08% 43.52% 49.08% 47.49% 47.23%
Net Credit Losses $754.2 $646.3 $533.9 $445.1 $419.5
Net Credit Loss
Rate 10.29% 9.34% 8.48% 7.61% 7.42%
Delinquency Rate
(30+ Days) 8.04% 7.64% 7.52% 6.71% 6.48%
Equity to Managed
Assets 6.76% 6.64% 6.58% 6.31% 5.90%
On Balance Sheet:
Allowance as a
Percent of Loans 10.55% 10.51% 10.50% 10.12% 10.06%
Net Credit Loss
Rate 10.21% 9.62% 9.42% 8.36% 7.82%
Delinquency Rate
(30+ Days) 8.83% 8.88% 8.97% 8.07% 8.16%
Common Share Statistics:
EPS -- Basic $0.82 $0.81 $0.83 $0.71 $0.66
EPS -- Assuming
Dilution (C) $0.79 $0.78 $0.80 $0.68 $0.64
Book Value Per Share
(Period End) $8.53 $7.74 $7.11 $6.34 $5.54
Total Market
Capitalization
(Period End) $16,905 $13,990 $16,440 $18,150 $12,845
Shares Outstanding
(Period End) 285.6 285.2 285.9 285.8 285.4
Weighted Average
Shares O/S -- Basic 284.6 284.8 284.7 284.4 283.7
Weighted Average
Shares O/S
-- Diluted 297.6 298.0 297.7 295.4 291.6
Accounts 17.7 17.1 16.3 15.0 13.9
Employees (FTE) 12,631 12,434 12,449 11,625 11,718
(A) Represents 2000 financial and statistical earnings information
adjusted to exclude the one-time settlement charges and the gain on
the sale of home equity loans. Asset, liability, and equity balances
have not been adjusted.
(B) Risk-adjusted margin is total loan revenue less credit losses as a
percentage of average managed loans.
(C) EPS -- Assuming Dilution reflects a $2.0 million net of tax add-back
to net income representing interest expense on a 3.25% Convertible
Note in accordance with FAS 128.
SOURCE Providian Financial Corporation
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Related links:
http://www.providian.com
CONTACT:
equity investors, Nancy Murphy,
+1-415-278-4483, or Jack Carsky, +1-415-278-4977, or fixed income
investors, Bill Horning, +1-415-278-4602, or media, Alan Elias,
+1-415-278-4844, all of Providian Financial Corporation
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