EXHIBIT 99
PROVIDIAN FINANCIAL REVISES EARNINGS GUIDANCE IN LIGHT OF LEGAL DEVLOPEMENTS
SAN FRANCISCO, June 20, 2000 - Providian Financial Corporation (NYSE: PVN),
today announced that it is revising its earnings guidance for 2000 to a range of
$4.24 to $4.34 per diluted share in light of certain one-time events. Excluding
these one-time events, the Company indicated, it would expect 2000 earnings of
$5.10 to $5.20 per diluted share. The Company revised its guidance to reflect
potential one-time charges associated with its ongoing discussions with the
Office of the Comptroller of the Currency (OCC) and the San Francisco District
Attorney's Office concerning possible settlement of pending legal inquiries, and
the settlement announced yesterday with the Connecticut Attorney General's
Office. The revision also reflects a one-time net gain on the Company's June 16,
2000 sale of $1.5 billion of home equity loans. The Company reiterates its goal
of achieving long-term earnings-per-share growth of 25% based on its earnings
guidance exclusive of these one-time events.
If the Company reaches a settlement with the OCC and the San Francisco District
Attorney by June 30, 2000, the settlement terms would have a one-time impact on
second quarter earnings. Nevertheless, the Company expects the second quarter
would be profitable. More specifically, including a one-time charge for the
possible settlement net of related reserves, offset by an approximate $0.26 per
share net gain on the home equity loan sale, the Company expects earnings per
diluted share to be in the range of $0.39 to $0.44 for the second quarter.
Excluding the one-time net charge for the anticipated settlement and the home
equity loan sale gain, the Company expects second quarter earnings per diluted
share in the range of $1.25 to $1.30.
The Company's ongoing discussions with the OCC and the San Francisco District
Attorney's Office have centered on certain marketing and sales practices,
primarily but not exclusively within the Company's Platinum credit card
business. Should these discussions result in a settlement, the Company
anticipates that it and its bank subsidiaries would have to make payments
consisting principally of restitution to customers, pay a fine, and modify
certain business practices. The Company has previously implemented many of the
potentially required modifications in the course of its year-old enhanced
customer satisfaction initiative. The discussions are continuing and the Company
is hopeful that the parties will reach agreement in the near future. There can,
however, be no certainty that a settlement will occur, nor is there certainty as
to the effect that any settlement might have on other legal proceedings
involving the Company.
The Company also expects both its wholly-owned bank subsidiaries (Providian
National Bank and Providian Bank) to maintain capital levels in excess of the
regulatory "well-capitalized" standard. The Company does not expect the possible
settlement to have a material effect on the cash flows of the underlying assets
in its securitization transactions.
As previously reported, the Company has also settled an inquiry by the
Connecticut Attorney General's office. The Company expects that any restitution
under its agreement with the Connecticut Attorney General will be substantially
offset by the restitution required under any agreement reached with the OCC and
the San Francisco District Attorney. Providian believes that fair resolution of
its legal issues will allow the Company to devote all of its attention to
building its customer-focused business, providing long-term benefits to its
shareholders, employees, and customers.
Providian's enhanced customer satisfaction initiative has resulted in
significant benefits not only for the Company's 13 million plus customers, but
also for the Company's employees and shareholders. During the past year, the
Company has established a "Providian Guarantee" that offers to cancel unwanted
products and refund fees; extended the grace period for late payments on credit
cards; set up a special customer service hotline to supplement its regular
customer service lines; enhanced disclosure information in printed materials, in
its telemarketing scripts, and on the Company's Web site (www.providian.com);
and instituted new quality control procedures, including digital call recording
for all outbound sales calls. As a result of these and other efforts, customer
satisfaction, as measured by independent surveys, has improved and customer
retention has increased.
Until such time as its settlement discussions with the OCC and the San Francisco
District Attorney conclude, the Company intends to make no further updates to
this disclosure.
About Providian Financial Corporation
San Francisco-based Providian Financial Corporation (www.providian.com) is a
leading provider of lending and deposit products to customers throughout the
United States and offers credit cards in the United Kingdom. The sixth largest
bankcard issuer in the U.S., Providian was recently named one of America's Most
Admired Companies by Fortune magazine. Providian serves a broad, diverse market
with loan products that include credit cards, secured cards and membership
products. With a commitment to 100% customer satisfaction, Providian's mission
is to help customers build or rebuild, protect and responsibly use credit by
providing a quality borrowing experience that leads to active and long-lasting
customer relationships. Providian has more than $26 billion in assets under
management and over 13 million customers.
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 market, credit market
or securitization market, 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.
For additional information:
Investors Media
Nancy Murphy Alan Elias
415.278.4483 415.278.4189
Jack Carsky
415.278.4977
Bill Horning
415.278.4602
