13
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X]Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended June 30, 1994
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from
to
Commission file Number 1-6701
Providia
n Corporation
(Exact name of Registrant as specified in its charter)
Delaware
51-0108922
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 West Market Street, Louisville, Kentucky 40202
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (502) 560-2000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___.
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of July 29, 1994.
Class Shares Outstanding
Common Stock, $1.00 par value 98,801,248
1 of 12
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
PROVIDIAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
June 30, 1994 December 31,
(Unaudited) 1993
Assets (Dollars in Thousands)
Investments:
Bonds and stocks, available for sale
(Amortized cost of $11,447,404 in 1994) $11,108,157
$ -
Bonds and stocks, trading 81,318 -
Bonds and stocks, held for investment
(Market value of $5,767,618 in 1993) - 5,323,421
Bonds and stocks, actively managed
(Amortized cost of $5,687,876 in 1993) - 5,711,777
Commercial mortgage loans 2,623,199 2,558,466
Residential mortgage loans 1,899,376 1,637,452
Consumer loans 1,498,514 1,867,944
Policy loans 354,501 351,507
Other investments 595,479 564,747
Total Investments 18,160,544 18,015,314
Cash and cash equivalents 570,532 719,053
Deferred policy and loan acquisition costs 1,419,964 1,373,481
Value of insurance in force purchased 284,396 283,509
Goodwill 226,108 230,183
Separate account assets 1,245,723 1,446,238
Other assets 925,936 861,227
Total Assets$22,833,203 $22,929,005
Liabilities and Shareholders' Equity
Liabilities:
Benefit reserves and other policy liabilities $ 9,024,163
$ 8,858,749
Policyholder contract deposits 7,337,626 6,641,744
Banking deposits 1,319,471 1,491,767
Separate account liabilities 1,245,723 1,446,238
Long-term debt 619,242 589,268
Deferred federal income tax 222,008 360,425
Other liabilities 766,645 1,047,923
Total Liabilities 20,534,878 20,436,114
Commitments and Contingencies
Preferred Stock of Consolidated Subsidiary 100,000 -
Shareholders' Equity:
Preferred stock, adjustable rate
cumulative, $100 face value $ - $ 100,000
Common stock, $1 par 115,325 115,325
Additional paid-in capital 56,841 57,053
Net unrealized investment gain (loss) (193,056) 17,204
Retained earnings 2,400,442 2,295,974
Common stock held in treasury - at cost:
1994-16,528,000 shares; 1993-13,899,000 shares (174,716) (89,289)
Unearned restricted stock (6,511) (3,376)
Total Shareholders' Equity 2,198,325 2,492,891
Total Liabilities and Shareholders' Equity$22,833,203 $22,929,005
See notes to condensed consolidated financial statements.
Item 1. (continued)
PROVIDIAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Six Months
Three Months
Period Ended June 30 1994 1993 1994
1993
(Amounts in Thousands Except Per
Common and Common Equivalent Share)
Revenues:
Premiums and other considerations $ 579,344 $ 597,589 $ 287,852
$ 290,000
Investment income, net of expenses 784,932 739,705 405,945 376,990
Consumer loan servicing fee 90,212 75,240 48,104 35,021
Realized investment gain (loss) (52,783) (17,526)(16,050) 1,635
Other income, net 41,851 49,695 19,446
29,231
Total Revenues1,443,556 1,444,703 745,297 732,877
Benefits and Expenses:
Benefits and claims 433,445 437,481 215,544 214,656
Increase in benefit and
contract reserves 307,330 296,937 167,361 144,731
Commissions, net 37,496 39,659 19,637 18,202
General, administrative and other
expenses, net 252,492 259,478 122,814 126,976
Amortization of deferred policy
and loan acquisition costs,
value of insurance in force
purchased and goodwill 159,273 145,780 78,109 77,997
Interest expense 42,940 38,711 23,704
18,901
Total Benefits and Expenses 1,232,976 1,218,046 627,169 601,463
Income before Federal Income Tax210,580 226,657 118,128 131,414
Federal Income Tax 64,085 69,291 35,641 39,884
Net Income before Preferred Stock
Dividends of Consolidated Subsidiary146,495 157,366 82,487 91,530
Dividends on Preferred Stock of
Consolidated Subsidiary 785 - 785
-
Net Income 145,710 157,366 81,702 91,530
Dividends on Nonconvertible
Preferred Stock 1,163 3,375 -
1,687
Net Income Applicable to Common Stock $ 144,547 $ 153,991
$ 81,702 $ 89,843
Net Income per Common and
Common Equivalent Share$ 1.44 $ 1.53 $ .82
$ .89
Cash Dividends per Common Share $ .40 $ .365
$ .20 $ .1825
Weighted Average Number of Common
and Common Equivalent Shares
Outstanding During the Period 100,383 100,962 99,404
101,033
See notes to condensed consolidated financial statements.
Item 1. (continued)
PROVIDIAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended June 30 1994 1993
(Dollars in Thousands)
Net Cash Flows from Operations $ 444,899 460,980
Cash Flows from Investment Activities:
Investments sold or matured 3,264,439 6,224,491
Cost of securities and mortgage loans acquired (4,125,223)
(7,158,847)
Additions to operating property (15,482) (22,932)
Net increase in consumer loans (189,396) (393,721)
Proceeds from securitization of consumer loans 574,629 1,069,692
Purchase of consumer loans (49,289) (535,937)
Acquisition of subsidiary - (59,363)
All other investment activities 7,955 49,001
Net Cash Flows used in Investment Activities(532,367) (827,616)
Cash Flows from Financing Activities:
Net increase (decrease) in short-term
borrowings 7,433 (36,577)
Policyholder contract deposits 1,487,385 1,341,468
Withdrawals of policyholder contract deposits (1,100,808) (839,182)
Net decrease in banking deposits (172,296) (123,952)
Issuance of long-term debt 30,000 -
Repayment of long-term debt (26) (35,126)
Net borrowings from revolving line of credit (175,000) (115,000)
Issuance of preferred stock 100,000 -
Redemption of preferred stock (100,000) -
Purchase of common stock for treasury (97,071) -
Dividends (42,657) (40,233)
Proceeds from exercise of stock options 1,987
2,215
Net Cash Flows from Financing Activities (61,053) 153,613
Net Decrease in Cash and Cash Equivalents(148,521) (213,023)
Cash and Cash Equivalents at Beginning of Period 719,053 717,039
Cash and Cash Equivalents at End of Period$ 570,532 $ 504,016
See notes to condensed consolidated financial statements.
Item 1. (continued)
PROVIDIAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
A. The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with the instructions to Form 10-Q
and in conformity with generally accepted accounting principles and
reflect all adjustments which are, in the opinion of management,
necessary to a fair presentation of the results for the interim
periods presented. All such adjustments are of a normal recurring
nature. Certain 1993 amounts have been reclassified to conform to the
current year presentation. These reclassifications did not have a
significant effect on the Company's financial position, results of
operations or cash flows. The results of operations for the six-month
period ended June 30, 1994 are not necessarily indicative of the
results to be expected for the full year ending December 31, 1994.
These unaudited condensed consolidated financial statements should be
read in conjunction with the consolidated financial statements and
footnotes included in the Company's annual report on Form 10-K for the
year ended December 31, 1993.
B. The Company adopted Statement of Financial Accounting Standards (SFAS)
No. 115, "Accounting for Certain Investments in Debt and Equity
Securities", as of January 1, 1994 and classified substantially all of
its securities as "available for sale" at that time. In accordance
with SFAS No. 115, prior year financial statements have not been
restated to reflect the change in accounting principle. As a result
of the adoption of SFAS No. 115, the net unrealized investment gain
(loss) component of shareholders' equity increased by $261,400,000
(net of an adjustment to deferred policy acquisition costs of
$42,000,000 and deferred federal income taxes of $140,800,000) to
reflect the January 1, 1994, net unrealized gains on securities
classified as "available for sale" previously carried at amortized
cost. The adoption of SFAS No. 115 had no effect on net income.
C. Realized investment loss for the six months ended June 30, 1994
includes a first quarter non-recurring charge of $52.4 million for an
impaired investment in Granite Partners.
D. Per common and common equivalent share amounts have been calculated
using net income after dividends on nonconvertible preferred stock,
divided by the weighted average number of common and common equivalent
shares outstanding during the three-month and six- month periods.
Fully diluted net income per common share is not presented as it
approximates net income per common and common equivalent share.
E. Consumer loans have been reduced by the sale, without recourse, of
unsecured receivables under asset securitization plans during 1994 of
$525.7 million. Total unsecured consumer receivables outstanding
under securitization plans were $2.5 billion at June 30, 1994.
Item 1. (continued)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
F. An analysis of the allowance for loan losses on consumer and
mortgage loans for the six month periods ended June 30, 1994 and 1993
is as follows:
Consumer
Mortgage
Six-Months Ended June 30 1994 1993 1994
1993
(Dollars in Thousands)
Balance at beginning of period $ 75,061 $ 82,974 $ 51,362 $ 47,510
Current period provision (a)14,083 36,542 12,440 19,227
Current period chargeoffs,
net of recoveries (26,114) (38,653) (10,856) (17,466)
Balance at end of period$ 63,030 $ 80,863 $ 52,946 $ 49,271
(a) Includes the elimination of the allowance on consumer loans
securitized without recourse of $18,823 and $5,138 in 1994 and
1993, respectively.
G. During June 1994, the Company issued $30.0 million of Series D medium-
term notes with maturities of 10 years and interest rates ranging from
7.78% to 7.85%. Subsequent to June 30, 1994, the Company issued an
additional $65.5 million of these notes with maturities ranging from
10 years to 21 years and interest rates ranging from 7.96% to 8.30%.
H. On March 2, 1994, the Company redeemed, at face value, all $100
million of its Adjustable Rate Cumulative Preferred Stock, Series F,
at $100 per share plus accrued and unpaid dividends through the date
of redemption. On May 12, 1994, Providian LLC, a subsidiary of the
Company, completed the issuance of 4,000,000 shares of Cumulative
Monthly Income Preferred Stock (MIPS) at $25 per share to replace the
redeemed Series F Preferred Stock. The MIPS pays monthly dividends at
an annual rate of 8.875 percent. The Company has unconditionally
guaranteed all legally declared and unpaid dividends of Providian LLC.
I. In May 1993, the FASB issued SFAS No. 114, "Accounting by Creditors
for Impairment of a Loan", which establishes accounting standards for
creditors when a loan is deemed impaired. The Statement is primarily
applicable to the commercial loan portfolio, as large groups of
smaller balance homogenous loans such as credit card, consumer
installment loans or residential mortgages are excluded. The Company
is currently determining the impact of this Statement, which is
required for calendar year 1995 financial statements. However,
adoption is not expected to have a material effect on the Company's
financial position or results of operations.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Operations
Providian's net income for the quarter ended June 30, 1994 was $.82 per
common and common equivalent share (hereinafter called "per common share"),
down 7.9 percent from last year's $.89 per common share. Net income for
the six months ended June 30, 1994 was $1.44 per common share, down 5.9
percent from last year's $1.53 per common share. Year to date net income
includes pretax realized losses of $52.8 million, comprised of realized
investment and securities gains of $12.0 million offset by provisions for
mortgage loan losses of $12.4 million and the non-recurring first quarter
write-off of our impaired investment in Granite Partners of $52.4 million.
Earnings, excluding realized investment gains and losses, net of related
deferred acquisition cost amortization and tax and dividends on the
preferred stock of a consolidated subsidiary, for the three months ended
June 30, 1994 were $.93 per common share, up 8.1 percent from the $.86 per
common share reported last year. Earnings year to date were $1.83 per
common share, up 9.6 percent from the $1.67 reported in 1993. Strong
growth in the Banking, Direct Response and Capital Management (formerly
Accumulation and Investment) groups contributed to these results.
Revenues, as discussed hereinafter, exclude realized investment gains and
losses. Consolidated revenues for the quarter were $761.3 million, up 4.1
percent from the $731.2 million in the prior year quarter and for the six
months were $1,496.3 million, up 2.3 percent from 1993, primarily the
result of higher investment income and consumer loan servicing fees.
Consolidated premiums in the second quarter were $287.9 million,
essentially even with 1993. Year to date premiums were down 3.1 percent to
$579.3 million, primarily from lower life annuity sales in Capital
Management as the Company continues to focus on writing business only at
acceptable profit margins. Investment income is up 7.7 percent for the
quarter and 6.1 percent for the six months due to growth in assets.
Consumer loan servicing fees are up 37.4 percent for the quarter and 19.9
percent for the year due to an increase in average securitized balances
being serviced by the Banking Group.
Agency Group pretax earnings for the six months were $92.2 million, down
2.9 percent from a year ago due to unfavorable mortality, lower investment
portfolio yields and lower partnership earnings as a result of certain
terminated partnership business. These unfavorable factors were partially
offset by reduced operating expenses and favorable health morbidity. Life
pretax earnings, which account for most of Agency Group income, declined
1.1 percent to $90.5 million, primarily due to unfavorable mortality
partially offset by reduced expenses. Life profit margins, defined as
pretax earnings as a percentage of mean policyholder reserves, were 8.0
percent, below 1993's margin of 8.3 percent, due to unfavorable mortality,
declining investment yields and premium shortfall. Agency Group premiums
were $219.0 million for the six months, down 2.1 percent, reflecting slow
sales in the life and health product lines and some terminated partnership
business. Life and health sales were down 16.7 percent, improved from
first quarter but not fully recovered from the effect of the snow storms
and other inclement weather in January and February. The combined life and
health termination rate of 13.7 percent improved significantly from the
prior year rate of 15.9 percent reflecting lower first year terminations
related to the sales decline and improved conservation efforts.
Direct Response Group pretax earnings for the first six months of 1994 were
$51.3 million, improved 12.8 percent over the same period in 1993,
primarily resulting from a strong focus on cost management and losses
recorded in 1993 on an investment in a small third-party administrator.
Life, health and other pretax earnings increased 12.9 percent to $47.2
million while property and casualty pretax earnings of $4.1 million
improved 11.2 percent over last year's $3.7 million. Life profit margins
(defined as pretax earnings as a percentage of premium income) were 20.7
percent for the six month period, improved from last year's margin of 20.1
percent. Health profit margins (pretax earnings as a percentage of premium
income) at 21.0 percent were also improved for the first six months of 1994
(19.9 percent in 1993). Both the life and health profit margins improved
due to reduced spending resulting from cost management efforts. The
property and casualty combined ratio (ratio of total dollars of claims and
expenses incurred for each $100 of premiums) continues to show a positive
trend at 105.3 percent compared to 106.0 percent for the first six months
of 1993. Direct Response Group premiums were up
Item 2. (continued)
2.6 percent to $340.6 million, primarily as a result of the January 1994
acquisition of a block of business from Skandia U.S. Insurance Company, an
auto insurer specializing in the active-duty military market. Life
premiums declined slightly from last year as growth was more than offset by
the effects of a reinsurance agreement, while health premiums declined 7.6
percent despite improvements in persistency.
Banking Group continued its strong performance with pretax earnings of
$70.3 million for the six months, up 24.4 percent from 1993 due to growth
in total managed loans, increased fee-based income, lower cost of funds and
lower overall credit losses. Total loans under management, including $2.5
billion of securitized receivables were $4.0 billion, up $456.6 million
from June 1993. Secured Card product balances increased to $69.2 million
compared to $29.4 million at June 30, 1993. First Gold product balances
grew to $416.5 million and Select Equity balances grew to $370.4 million at
June 30, 1994 compared to $120.5 million and $263.4 million, respectively,
at June 30, 1993. Return on mean assets was 6.9 percent compared to 5.7
percent a year ago due to the growth in fee income, aggressive pricing and
improved net credit losses. Loan loss reserves related to unsecured
consumer receivables, excluding securitized receivables, were 5.6 percent
compared to 6.2 percent at June 30, 1993 and 4.8 percent at year end 1993.
Net credit losses related to unsecured consumer receivables, excluding
securitized receivables, were 3.6 percent in 1994, compared to 4.7 percent
for the same six month period of 1993 and 4.2 percent for the full year
1993. Balances past due 30 days or more related to unsecured consumer
receivables, excluding those securitized, were even with June 30, 1993 at
2.3 percent compared to the 2.2 percent year end rate. The following table
summarizes dollar amounts of unsecuritized problem consumer loans, as of
June 30, 1994 and December 31, 1993:
June 30, 1994 December 31, 1993
(Dollars in Millio
ns)
Non-accrual loans $ 5.5 $ 8.0
Loans past due greater than 30 days 38.8 45.2
Total problem consumer loans$ 44.3 $ 53.2
There were no additional specifically identified loans that represented
significant potential problems.
Capital Management pretax earnings for the six month period were $72.6
million, up 10.0 percent, primarily from increased volume of spread and
fee-based business, partially offset by increased amortization of retail
acquisition costs. Mean spread-based policyholder deposits, a key driver
of profitability, grew by 7.2 percent during 1994. Profit margins on
spread-based deposits (pretax earnings as a percentage of mean spread-based
policyholder deposits) were 116 basis points for the first six months of
1994, down from 1993's 118 basis points and first quarter's margin of 121
basis points, a result of increases in short and intermediate term interest
rates in the second quarter of 1994. These increases in short and
intermediate term interest rates will continue to compress margins over the
remainder of 1994. If rates continue to rise, the decline in margins will
be more significant. At June 30, 1994, total spread- and fee-based
policyholder deposits stood at $13.5 billion, up from $12.7 billion at
December 31, 1993, a result of favorable institutional deposit growth.
Institutional deposits grew $696.8 million, including $633.2 million in the
short-indexed GIC and $156.7 million in the index-guaranteed Total Return
Account Contract products. Retail spread-based deposits grew only $7.8
million year to date due to withdrawals resulting from the aggressive rate
crediting strategy as the Company continues to emphasize profitability over
volume growth. Fee-based variable annuities grew $96.3 million, despite
lower stock market values during the year. In addition, the institutional
fee-based Trust GIC, which is not reflected as a deposit on the Company's
balance sheet, grew $2.2 billion to $6.7 billion as of June 30, 1994.
Cash and invested assets were $18.7 billion, essentially even with December
31, 1993. Excluding Banking Group, invested assets related to insurance
operations were $17.0 billion compared to $16.7 billion at December 31,
1993. The distribution of invested assets at June 30, 1994 has not changed
significantly from December 31, 1993. Exposure to below-investment grade
bonds and preferred stocks
Item 2. (continued)
at June 30, 1994 was 5.1 percent, compared to 4.6 percent at December 31,
1993. Additionally, there were no securities in the bond and preferred
stock portfolio that were delinquent as to interest or dividends. While we
experienced a significant impairment in the first quarter of 1994 in
Granite Partners, default and loss experience in the remainder of the
securities portfolio is good with no defaults and no other significant
losses as a result of impairments in value during 1994.
Problem commercial mortgage loans (based on the American Council of Life
Insurance definition, which includes loans past due 60 days or more, loans
in the process of foreclosure, restructured loans and real estate acquired
through foreclosure) as of June 30, 1994, amounted to 6.27 percent of
outstanding commercial loans, up from 5.12 percent at December 31, 1993,
primarily due to the addition of one additional loan to the problem
category. The industry average for problem commercial mortgage loans was
19.95 percent at March 31, 1994 (the most recently published statistics).
Problem residential mortgage loans (based on Mortgage Bankers Association
(MBA) standards, which is based on the number of loans that are past due 30
days or more, and loans in the process of foreclosure) were 3.33 percent
and 3.59 percent at June 30, 1994 and December 31, 1993, respectively. The
MBA average for problem residential mortgage loans was 4.78 percent at
March 31, 1994 (the most recently published statistics). Loans on which
the Company has discontinued the accrual of interest and restructured loans
accruing interest as of June 30, 1994 and December 31, 1993 were as
follows:
Commercial Loans
Residential Loans
June 30,December 31,June 30,December 31,
1994 1993 1994 1993
(Dollars in Millions)
Non-accrual loans $ 86.8 $ 64.3 $ 11.5 $ 12.6
Restructured loans,
accruing interest 11.2 5.2 - -
Total $ 98.0 $ 69.5 $ 11.5 $ 12.6
As of June 30, 1994, there were approximately $35.0 million of commercial
mortgage loans with identified potential problems which could cause these
loans to be included in a problem category in the future; we do not
anticipate any material losses to arise from these loans.
As of January 1, 1994, the Company adopted the provisions of Statement of
Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities", and classified substantially
all of its securities as "available for sale". Adoption of SFAS No. 115
has introduced additional volatility to reported shareholders' equity by
reporting debt and equity securities at fair value while other assets and
all liabilities are reported at historical cost. Thus, the following
reported financial results do not represent the underlying economics since
other assets and all liabilities are not reported at fair value. As a
result of the adoption of SFAS No. 115, the net unrealized investment gain
(loss) component of shareholders' equity increased by $261.4 million at
January 1, 1994. During the six months of 1994, the net unrealized gain
(loss) component of shareholders' equity, net of related adjustments to
deferred policy acquisition costs and deferred federal income taxes,
decreased by $471.7 million. The decrease resulted primarily from the
increase in interest rates and by the realized investment and securities
gains recognized during the first half of 1994.
Liquidity and Cash Flow
Net cash flows from operations were $444.9 million during the six-months,
compared to $461.0 million last year. Commercial paper borrowings averaged
$125.9 million during the six months at a weighted average interest rate of
3.79 percent. Commercial paper outstandings at June 30, 1994 were $99.1
million. The Company has committed lines of credit of $850.0 million which
would provide additional liquidity should adverse conditions arise. First
Deposit also maintains committed lines of credit as part of its liquidity
management. At June 30, 1994 there were no outstanding borrowings under its
$400 million revolving credit agreement. In addition, the Company's bond
and stock portfolio of $11.2 billion at June 30, 1994 provides a
significant source of short-term liquidity.
Item 2. (continued)
During the second quarter, the Company issued $30.0 million of its Series D
medium-term notes. Subsequent to June 30, 1994 an additional $65.5 million
of the notes were issued bringing the total outstanding Series D medium
term notes to $95.5 million.
During the six-months, the Company repurchased 3.0 million shares of its
common stock at an average price of $32.36 per share. As described in Note
H to the condensed consolidated financial statements, in the first quarter
the Company redeemed all $100 million of its Adjustable Rate Cumulative
Preferred
Stock, Series F. In May 1994, Providian LLC, a subsidiary of the Company,
issued $100 million of Cumulative Monthly Income Preferred Stock (MIPS)
paying monthly dividends at an annual rate of 8.875 percent. Providian LLC
loaned the net proceeds from the issuance of the MIPS to the Company to
provide permanent funding for the redemption of the Company's Adjustable
Rate Cumulative Preferred Stock, Series F. The Company has unconditionally
guaranteed all legally declared and unpaid dividends of Providian LLC.
The Company is a legal entity, separate and distinct from its subsidiaries.
As a holding company with no other business operations, its primary sources
of cash to meet its obligations, including principal and interest payments
with respect to indebtedness, are dividends and other statutorily permitted
payments from its subsidiaries.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In the normal course of business, the Company and its subsidiaries are
parties to a number of lawsuits. Management believes that these suits
will be resolved with no material financial impact on the Company.
Item 2. Change in Securities
Not applicable
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Exhibits: None
Reports: On May 25, 1994, the Company filed a current
report dated May 12, 1994, on Form 8-K, Item 5 (Other Events)
and Item 7(c) (Exhibits). The report was in regard to the
issuance by Providian LLC, a subsidiary of the Company, of
4,000,000 shares of 8.875 percent Cumulative Monthly Income
Preferred Stock ("MIPS") at $25 per share. Also on May 12,
1994, Providian LLC loaned the net proceeds of the issuance
of the MIPS to the Company to provide permanent funding for
the redemption of the Company's Adjustable Rate Preferred
Stock, Series F, which was redeemed on March 2, 1994.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Providian Corporation
(Registrant)
Date: August 12, 1994 Robert L. Walker
Senior Vice President - Finance
and Chief Financial Officer
Date: August 12, 1994 Steven T. Downey
Vice President and Controller
