<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this pricing supplement and the related prospectus +
+supplement and prospectus is not complete and may be changed. An effective +
+registration statement relating to these securities has been filed with the +
+Securities and Exchange Commission. This pricing supplement, together with +
+the related prospectus supplement and prospectus, is not an offer to sell +
+these securities and it is not soliciting an offer to buy these securities in +
+any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Filed Pursuant to Rule 424(b)(5)
File No. 333-55937
SUBJECT TO COMPLETION DATED MAY 14, 1999
Pricing Supplement
(to Prospectus Supplement Dated May 14, 1999 and Prospectus Dated May 14, 1999)
$200,000,000
[LOGO OF PROVIDIAN FINANCIAL]
Providian Financial Corporation
% Senior Notes Due , 20
Maturity
. The notes will mature on , 20 .
Interest
. Interest on the notes is payable on and of each year, beginning ,
1999.
. Interest on the notes will accrue from May , 1999.
Redemption
. We may not redeem the notes prior to maturity.
. There is no sinking fund.
Ranking
. The notes are unsecured. The notes rank equally with all of our existing and
future senior debt and senior to all of our existing and future subordinated
debt.
Listing
. We do not intend to list the notes on any securities exchange or quotation
system.
The Company
. Our principal office is located at 201 Mission Street, San Francisco,
California 94105. Our telephone number is (415) 543-0404.
------------------------------------
The notes are not savings accounts, deposits or other obligations of a bank.
The notes are not guaranteed by any bank and are not insured by the Federal
Deposit Insurance Corporation or any other governmental agency.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the notes or determined that this
pricing supplement or the attached prospectus supplement and prospectus is
accurate or complete. Any representation to the contrary is a criminal offense.
------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Per Note Total
- -------------------------------------------------------------------------------
<S> <C> <C>
Initial Price to Public................................ % $
Underwriting Discount.................................. % $
Proceeds to Us (Before Expenses)....................... % $
</TABLE>
- --------------------------------------------------------------------------------
You will also be required to pay any interest that has accrued on the notes
since , 1999.
------------------------------------
. The notes will be . The underwriters will
delivered to you in purchase the notes from
global form through the us on a firm commitment
book-entry delivery basis and offer them to
system of The Depository you, subject to certain
Trust Company on or conditions.
about May , 1999.
Chase Securities Inc.
Credit Suisse First Boston
Goldman, Sachs & Co.
Lehman Brothers
-----------
The date of this pricing supplement is May , 1999.
<PAGE>
In making your investment decision, you should rely only on the information
contained or incorporated by reference in this pricing supplement and the
attached prospectus supplement and prospectus. We have not authorized anyone to
provide you with any other information. If you receive any unauthorized
information, you must not rely on it.
We are offering to sell the notes only in places where sales are permitted.
You should not assume that the information contained or incorporated by
reference in this pricing supplement or the attached prospectus supplement and
prospectus is accurate as of any date other than their respective dates.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Pricing Supplement Page Prospectus Page
------------------ ---- ---------- ----
<S> <C> <C> <C>
The Company................................ P-3 Index of Terms................................... 6
Recent Developments........................ P-3 Available Information............................ 7
Selected Consolidated Financial Data....... P-4 Incorporation of Certain Documents by Reference.. 7
Use of Proceeds............................ P-7 Providian Financial Corporation.................. 8
Capitalization............................. P-7 The Financing Trusts............................. 8
Description of Notes....................... P-7 Use of Proceeds.................................. 9
Underwriting............................... P-8 Ratio of Earnings to Fixed Charges and Ratio of
Earnings to Combined Fixed Charges and
Preferred Stock Dividend Requirements.......... 9
General Description of Securities and
Prospectus Supplement Page Risk Factors................................... 10
--------------------- ---- Description of the Common Stock.................. 10
About This Prospectus Supplement Description of the Preferred Stock............... 11
And Pricing Supplements.................. S-3 Description of the Depositary Shares............. 12
Risk Factors............................... S-3 Description of the Debt Securities............... 15
Providian Financial Corporation............ S-5 Description of the Warrants to Purchase
Description of Notes....................... S-11 Common Stock or Preferred Stock................ 17
Special Provisions Relating to Foreign Description of the Third Party Warrants.......... 18
Currency Notes........................... S-47 Description of the Warrants to Purchase
Certain United States Federal Debt Securities.................................. 19
Income Tax Consequences.................. S-49 Description of the Stock Purchase Contracts
Supplemental Plan of Distribution.......... S-59 and Stock Purchase Units....................... 20
Description of the Preferred Securities.......... 21
Description of the Guarantees.................... 21
Description of the Other Units................... 24
Plan of Distribution............................. 24
ERISA and Tax Considerations..................... 26
Legal Matters.................................... 26
Experts.......................................... 26
</TABLE>
P-2
<PAGE>
THE COMPANY
Providian Financial Corporation (the Company), based in San Francisco,
California, was incorporated in Delaware in 1984 under the name "First Deposit
Corporation." The name of the Company was changed from First Deposit
Corporation to Providian Bancorp, Inc. in 1994 and to Providian Financial
Corporation in 1997. The Company conducted its operations as a wholly-owned
subsidiary of Providian Corporation until June 10, 1997, when all of the then
outstanding shares of common stock of the Company were spun off to the
stockholders of Providian Corporation. The Company is listed on the New York
Stock Exchange and the Pacific Exchange under the symbol PVN.
The Company, operating through its subsidiaries, is a diversified consumer
lender, offering a range of loan products, including credit cards, revolving
lines of credit, home loans, secured credit cards, and fee-based products. The
Company also offers various deposit products. With $15.9 billion in assets
under management and nine million customers as of March 31, 1999, the Company
ranks among the ten largest bankcard issuers in the nation as of that date.
RECENT DEVELOPMENTS
On April 22, 1999, the Company announced record first quarter net income of
$113.5 million, an increase of 102% over the first quarter of 1998. Diluted
earnings per share increased to $0.78 per share, an increase of 100% over the
first quarter of 1998.
The Company added over one million accounts during the quarter, bringing
total customer relationships to nine million. All business lines contributed to
this increase which represented a 69.3% gain over the first quarter of 1998 and
a 13.5% sequential quarter gain.
The strong growth in accounts resulted in a commensurate increase in total
managed revenue, which increased by 88% over the first quarter of 1998, to
$851.1 million. Spread-based revenue increased 50% over the first quarter of
1998, to $434.9 million, fueled by strong loan growth and stable margins.
During what historically has been a quarter of seasonal slowdown, total managed
loans increased 8%, or $1.1 billion, over the fourth quarter of 1998, a 35%
increase over the first quarter of 1998. The net interest margin for the first
quarter was 12.26% as a result of the enhanced performance of certain portfolios
acquired in 1998 as well as growth in higher margin credit products. Fee-based
revenue grew by 157% over the first quarter of 1998 to $416.2 million, and
represented 48.9% of total managed revenue, in line with management's goal of
diversifying revenue sources. Growth in all fee revenue sources was strong,
including fee-based product revenue, which was up 223% over the first quarter of
1998.
The managed net credit loss rate declined by 51 basis points in the first
quarter over the fourth quarter of 1998, to 7.62%. Lower credit loss rates in
the Company's platinum, acquired and other higher line portfolios, which
represent over 70% of total managed loans, more than offset an increase in
credit losses resulting from the seasoning of the lower line credit card
portfolios. This combination of improving margins and loss rates in the first
quarter added up to a risk-adjusted margin of 16.72%, a 626 basis point
improvement over the first quarter of 1998.
Providian continued to strengthen its balance sheet to support long term
growth by building both capital and reserves. During the first quarter, loan
loss reserves increased by $96 million to $548 million, representing 8.0% of on-
balance sheet loans. Capital and reserves totaled $1.6 billion at March 31,
1999, representing 19.1% of on-balance sheet assets and 10.3% of managed assets.
The Company generated a
P-3
<PAGE>
return on average equity of 52.19% and return on average managed assets of 2.98%
in the first quarter of 1999.
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected consolidated financial data for the
Company as of the dates or for the periods indicated. This information should
be read in conjunction with, and is qualified in its entirety by reference to,
the detailed information and financial statements included in the documents
incorporated by reference in the attached prospectus supplement and prospectus.
<TABLE>
<CAPTION>
Three Months Ended Year Ended
March 31 December 31
------------------------------------ ------------------------------------
1999 1998 1998 1997
(unaudited)
------------------------------------ ------------------------------------
(Dollars in millions, except per share data)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA
Interest income:
Loans $279.1 $170.1 $ 807.8 $556.9
Investment securities 12.5 6.5 34.8 25.6
--------------- --------------- --------------- ----------------
Total interest income 291.6 176.6 842.6 582.5
Interest expense:
Deposits 64.4 46.2 204.3 164.3
Borrowings 16.1 8.6 42.9 18.9
--------------- --------------- --------------- ----------------
Total interest expense 80.5 54.8 247.3 183.1
Net interest income 211.1 121.8 595.3 399.4
Provision for credit losses 182.1 57.7 545.9 149.3
--------------- --------------- --------------- ----------------
Net interest income
(loss) after provision
for credit losses 29.0 64.2 49.4 250.1
Non-interest income 477.3 210.7 1,266.2 634.6
Non-interest expenses 317.1 182.1 825.0 573.4
--------------- --------------- --------------- ----------------
Income before income taxes 189.2 92.8 490.6 311.3
Income tax expense 75.6 36.7 194.1 119.8
--------------- --------------- --------------- ----------------
Net Income $113.5 $ 56.1 $ 296.4 $191.5
=============== =============== =============== ================
Basic earnings per share $0.80 $0.39 $2.09 N/A
=============== =============== =============== ================
Earnings per share -- assuming dilution $0.78 $0.39 $2.04 N/A
=============== =============== =============== ================
Dividends paid per share $0.05 $0.03 $0.15 $0.07
=============== =============== =============== ================
</TABLE>
P-4
<PAGE>
<TABLE>
<CAPTION>
Three Months
Ended Year Ended
March 31 December 31
------------------------- ------------------------------------------------
1999 1998 1997
(unaudited)
------------------------- ---------------------- ----------------------
<S> <C> <C> <C>
BALANCE SHEET DATA (Dollars in millions, except per share data)
Cash and cash equivalents $ 123.3 $ 176.3 $ 112.5
Federal funds sold 600.8 297.9 115.0
Investment securities 339.7 433.7 172.8
Loans held for securitization or sale -- -- 450.2
Loans receivable, less allowance for
credit losses 6,295.9 5,282.0 2,815.4
Premises and equipment, net 91.5 82.9 61.6
Interest receivable 61.2 51.8 30.2
Due from securitizations 456.6 454.4 522.4
Other assets 557.9 452.3 169.4
------------------------- ---------------------- ----------------------
Total assets $8,527.0 $7,231.2 $4,449.4
========================= ====================== ======================
Deposits $5,215.3 $4,672.3 $3,212.8
Short-term borrowings 455.0 472.5 232.0
Long-term borrowings 949.3 399.8 --
Deferred fees 394.2 334.6 64.7
Accrued expenses and other
liabilities 428.6 388.9 184.8
------------------------- ---------------------- ----------------------
Total liabilities 7,442.5 6,268.0 3,694.3
Capital securities 160.0 160.0 160.0
Total shareholders' equity 924.5 803.2 595.1
------------------------- ---------------------- ----------------------
Total liabilities and
shareholders' equity $8,527.0 $7,231.2 $4,449.4
========================= ====================== ======================
</TABLE>
P-5
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Year Ended
March 31 December 31
----------------------------------- ------------------------------------
1999 1998 1998 1997
--------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
FINANCIAL & STATISTICAL SUMMARY DATA (in millions, except per share data and as noted)
Earnings (Managed Basis):
Net Interest Income $434.9 $290.1 $1,361.9 $1,047.5
Non-Interest Income 416.2 162.1 1,011.1 459.7
--------------- --------------- ---------------- ---------------
Total Revenue 851.1 452.2 2,373.0 1,507.2
Provision for Loan Losses 344.8 177.3 1,057.4 622.4
Non-Interest Expense 317.1 182.1 825.0 573.5
--------------- --------------- ---------------- ---------------
Income Before Taxes 189.2 92.8 490.6 311.3
Tax Expense 75.7 36.7 194.2 119.8
--------------- --------------- ---------------- ---------------
Net Income $113.5 $ 56.1 $ 296.4 $ 191.5
=============== =============== ================ ===============
Managed Financial Data:
Quarter End:
Consumer Lending:
Credit Card - Unsecured Spread $ 9,781 $ 8,596 $ 9,390 $ 7,981
Credit Card - Unbanked 3,362 992 2,748 858
Home Loans 1,198 1,068 1,107 1,063
--------------- --------------- ---------------- ---------------
Total Consumer Lending $14,341 $10,656 $13,245 $ 9,902
Securitized Loans $ 7,484 $ 6,886 $ 7,504 $ 6,491
Total Assets $15,882 $12,529 $14,606 $11,241
Total Capital (Includes Capital Securities) $ 1,085 $ 800 $ 963 $ 755
Total Equity $ 925 $ 640 $ 803 $ 595
Key Statistics:
Managed:
Net Interest Margin (Earning Assets) 11.81% 10.55% 11.29% 10.66%
Net Interest Margin (Loans) 12.26% 11.09% 11.80% 11.23%
Return on Average Assets 2.98% 1.84% 2.30% 1.81%
Return on Average Equity 52.19% 36.17% 42.76% 36.79%
Fee Based Product Revenue $117.0 $ 36.2 $238.5 $ 83.3
Net Credit Losses $262.8 $178.5 $867.5 $591.7
Net Credit Loss Rate 7.62% 6.78% 7.58% 6.32%
Delinquency Rate (30+ Days) 4.91% 4.61% 5.33% 4.22%
Equity to Managed Assets 5.82% 5.11% 5.50% 5.29%
On Balance Sheet:
Reserves as a Percent of Loans 7.99% 6.80% 7.86% 4.91%
Net Credit Loss Rate 6.36% 5.92% 7.71% 3.73%
Delinquency Rate (30+ Days) 5.37% 5.31% 5.69% 4.17%
Ratio of Earnings to Fixed Charges
Excluding Interest on Deposits 11.43 10.26 10.88 14.20
Including Interest on Deposits 3.29 2.65 2.93 2.66
</TABLE>
P-6
<PAGE>
USE OF PROCEEDS
The Company intends to use the net proceeds from the sale of the notes for
general corporate purposes, which may include possible acquisitions, investments
in securities and the reduction of debt of, and investments in, or extensions of
credit to, the Company's subsidiaries.
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company and its subsidiaries at March 31, 1999 and as adjusted as of such date
to give effect to the issuance of the notes offered hereby. This table should
be read in conjunction with the Company's consolidated financial statements and
the notes thereto incorporated by reference in the attached prospectus
supplement and prospectus.
<TABLE>
<CAPTION>
March 31, 1999
----------------------------------------------------------
Actual As Adjusted
----------------------------------------------------------
(in millions)
<S> <C> <C>
Interest bearing deposits $5,181.1 $5,181.1
Other borrowings 455.0 455.0
Senior Notes 949.3 949.3
Notes offered hereby -- 200.0
--------------------------- --------------------------
Total debt 6,585.4 6,785.4
Company obligated mandatorily redeemable capital
securities of subsidiary trust holding solely junior
subordinated deferrable interest debentures of the
Company (Capital Securities) 160.0 160.0
Common stock, par value $.01 per share; authorized
400,000,000 shares/1/, 141,914,876 issued 1.0 1.0
Retained earnings 976.4 976.4
Cumulative other comprehensive income (0.2) (0.2)
Less: Treasury stock at cost, 1,205,104 shares (52.7) (52.7)
Total shareholders' equity 924.5 924.5
--------------------------- --------------------------
Total capitalization $7,669.9 $7,869.9
=========================== ==========================
</TABLE>
/1/ On May 12, 1999 the Company amended its Certificate of Incorporation to
allow for the issuance of up to 800,000,000 shares of its common stock.
DESCRIPTION OF NOTES
The following description of the particular terms of the notes offered
hereby supplements, and to the extent inconsistent therewith modifies, the
description of the general terms and provisions of senior notes set forth in the
attached prospectus supplement and prospectus, to which description reference is
hereby made. You should read this pricing supplement and the attached
prospectus supplement and prospectus together for a complete description of the
notes. Capitalized terms not defined herein have the meanings assigned to such
terms in the accompanying prospectus supplement or prospectus.
P-7
<PAGE>
General
The Medium-Term Notes, Series A, of the Company offered hereby are " %
Senior Notes Due , 20 " and are referred to in this pricing
supplement as the "notes." The notes are senior fixed rate notes as described
in the attached prospectus supplement.
The notes will bear interest at the annual rate of %, payable
semiannually in arrears on each and of each
year, beginning , 1999, to the persons in whose names the notes
are registered at the close of business on the or
, as the case may be, next preceding such and .
The notes will mature on , 20 .
The notes do not provide for any sinking fund and may not be redeemed prior
to maturity.
Defeasance and Discharge
The defeasance provisions of the senior indenture described under
"Description of NotesOther Indenture ProvisionsDefeasance and Discharge" in the
attached prospectus supplement will apply to the notes.
Same-Day Settlement and Payment
Settlement by purchasers of the notes will be made in immediately available
funds. All payments by the Company to the depositary of principal and interest
will be made in immediately available funds.
UNDERWRITING
We and the underwriters have entered into a terms agreement, dated May
, 1999 (including certain sections of the distribution agreement, dated May 14,
1999, incorporated therein by reference), relating to the offering and sale of
the notes (the terms agreement). In the terms agreement, we have agreed to sell
to each underwriter, and each underwriter has agreed to purchase from us, the
principal amount of notes that appears opposite its name in the table below:
<TABLE>
<CAPTION>
Principal
Underwriter Amount
------------------
<S> <C>
Chase Securities Inc. .................................................. $
Credit Suisse First Boston Corporation..................................
Goldman, Sachs & Co. ...................................................
Lehman Brothers Inc. ...................................................
------------------
Total................................................................... $ 200,000,000
==================
</TABLE>
The obligations of the underwriters under the terms agreement, including
their agreement to purchase notes from us, are several and not joint. Those
obligations are also subject to certain conditions in the terms agreement being
satisfied. The underwriters have agreed to purchase all of the notes if any of
them are purchased.
The underwriters have advised us that they propose to offer the notes to
the public at the public offering price that appears on the cover page of this
pricing supplement. The underwriters may offer the notes to selected dealers at
the public offering price minus a selling concession of up to % of the
P-8
<PAGE>
principal amount. In addition, the underwriters may allow, and those selected
as dealers may reallow, a selling concession of up to % of the principal
amount to certain other dealers. After the initial public offering, the
underwriters may change the public offering price and any other selling terms.
In the terms agreement, we have agreed that:
. we will pay our expenses related to offering the notes, which we
estimate will be $100,000; and
. we will indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, as amended.
The notes are a new issue of securities, and there is currently no
established trading market for the notes. In addition, we do not intend to
apply for the notes to be listed on any securities exchange or to arrange for
the notes to be quoted on any quotation system. The underwriters have advised
us that they intend to make a market in the notes, but they are not obligated to
do so. The underwriters may discontinue any market making in the notes at any
time in their sole discretion. Accordingly, we cannot assure you that a liquid
trading market will develop for the notes, that you will be able to sell your
notes at a particular time or that the prices that you receive when you sell
your notes will be favorable.
In connection with the offering of the notes, the underwriters may engage
in overallotment, stabilizing transactions and syndicate covering transactions
in accordance with Regulation M under the Securities Exchange Act of 1934, as
amended. Overallotment involves sales in excess of the offering size, which
creates a short position for the underwriters. Stabilizing transactions involve
bids to purchase the notes in the open market for the purpose of pegging, fixing
or maintaining the price of the notes. Syndicate covering transactions involve
purchases of the notes in the open market after the distribution has been
completed in order to cover short positions. Stabilizing transactions and
syndicate covering transactions may cause the price of the notes to be higher
than it would otherwise be in the absence of those transactions. If the
underwriters engage in stabilizing or syndicate covering transactions, they may
discontinue them at any time.
In the ordinary course of their respective businesses, certain of the
underwriters or their affiliates have engaged and may in the future engage in
general financing and banking and investment banking transactions with the us
and our affiliates.
P-9
