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, 1995
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of
theSecurities Exchange Act of 1934
For the transition period from to
Commission file Number 1-6701
ProvidianCorporation
(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 31, 1995.
Class Shares
Outstanding
Common Stock, $1.00 par value
95,278,533
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
PROVIDIAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
June 30, 1995 December 31,
(Unaudited) 1994
(Dollars in Thousands)
Assets
Investments:
Bonds and stocks, available for sale
(Amortized cost of $10,941,441 and
$10,910,805 in 1995 and 1994, respectively)$11,180,049 $10,301,682
Bonds and stocks, trading 120,949 115,470
Commercial mortgage loans 2,594,514 2,649,664
Residential mortgage loans 3,066,598 2,550,194
Consumer loans 2,234,797 2,269,531
Policy loans 427,579 390,639
Other investments 542,002 418,321
Total Investments 20,166,488 18,695,501
Cash and cash equivalents 714,425 573,379
Deferred policy and loan acquisition costs 1,476,040 1,491,422
Value of insurance in force purchased 265,252 273,466
Goodwill 217,963 222,035
Separate account assets 1,681,137 1,353,476
Other assets 1,220,927 1,004,080
Total Assets $25,742,232 $23,613,359
Liabilities and Shareholders' Equity
Liabilities:
Benefit reserves and other
policy liabilities $ 9,890,599 $ 9,092,370
Policyholder contract deposits 7,548,944 7,421,604
Banking deposits 1,587,247 1,680,450
Separate account liabilities 1,681,137 1,353,476
Long-term debt 754,296 694,250
Deferred federal income tax 428,006 149,831
Other liabilities 1,098,883 999,516
Total Liabilities 22,989,112 21,391,497
Commitments and Contingencies
Preferred Stock of Consolidated Subsidiary 100,000 100,000
Shareholders' Equity:
Common stock, $1 par 115,325 115,325
Additional paid-in capital 54,249 57,096
Net unrealized investment gain (loss) 153,139 (344,526)
Retained earnings 2,623,621 2,512,935
Common stock held in treasury - at cost:
1995 - 19,905,000 shares;
1994 - 17,789,000 shares (288,275) (214,031)
Unearned restricted stock (4,939) (4,937)
Total Shareholders' Equity 2,653,120 2,121,862
Total Liabilities and Shareholders' Equity $25,742,232 $23,613,359
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 1995 1994 1995 1994
(Amounts in Thousands
Except Per Common Share)
Revenues:
Premiums and other considerations $605,995 $579,344 $310,584 $287,852
Investment income, net of expenses 931,996 780,228 478,202 401,241
Consumer loan servicing fees 98,323 90,212 48,503 48,104
Realized investment loss (50,288) (52,783) (16,132) (16,050)
Other income, net 67,909 46,555 35,226 24,150
Total Revenues 1,653,935 1,443,556 856,383 745,297
Benefits and Expenses:
Benefits and claims 451,210 433,445 222,576 215,544
Increase in benefit and contract
reserves 439,974 307,330 234,185 167,361
Commissions, net 40,431 37,496 21,516 19,637
General, administrative and other
expenses, net 319,757 252,492 162,789 122,814
Amortization of deferred policy
and loan acquisition costs, value
of insurance in force purchased
and goodwill 122,796 159,273 63,665 78,109
Interest expense 54,716 42,940 28,382 23,704
Total Benefits and Expenses 1,428,884 1,232,976 733,113 627,169
Income before Federal Income Tax 225,051 210,580 123,270 118,128
Federal Income Tax 68,323 64,085 37,671 35,641
Net Income before Preferred Stock
Dividends of Consolidated Subsidiary 156,728 146,495 85,599 82,487
Dividends on Preferred Stock of
Consolidated Subsidiary 2,885 785 1,443 785
Net Income 153,843 145,710 84,156 81,702
Dividends on Nonconvertible
Preferred Stock 1,163
Net Income Applicable
to Common Stock $153,843 $144,547 $84,156 $81,702
Net Income per Common Share $1.59 $1.44 $.88 $.82
Cash Dividends per Common Share $ .45 $ .40 $.225 $.20
Weighted Average Number of
Common SharesOutstanding
During the Period 96,663 100,383 96,163 99,404
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 1995 1994
(Dollars in Thousands)
Net Cash Flows provided by Operations $705,801 $ 463,709
Cash Flows from Investment Activities:
Investments sold or matured 2,204,494 3,264,439
Cost of securities and
mortgage loans acquired (2,286,764) (4,125,223)
Additions to operating property (14,179) (15,482)
Net increase in consumer loans (1,067,085) (170,712)
Securitization of consumer loans 1,324,443 574,629
Purchase of consumer loans (241,204) (49,289)
All other investment activities (17,106) 7,955
Net Cash Flows used
in Investment Activities (97,401) (513,683)
Cash Flows from Financing Activities:
Net decrease in short-term borrowings (1,822) (167,567)
Policyholder contract deposits 1,214,364 1,625,522
Withdrawals of policyholder
contract deposits (1,521,235) (1,257,755)
Net decrease in banking deposits (93,203) (190,980)
Issuance of long-term debt 84,035 30,000
Repayment of long-term debt (24,000) (26)
Issuance of preferred stock -- 100,000
Redemption of preferred stock -- (100,000)
Purchase of common stock
for treasury (87,932) (97,071)
Dividends (43,633) (42,657)
Proceeds from exercise of
stock options 6,072 1,987
Net Cash Flows used in
Financing Activities (467,354) (98,547)
Net Increase (Decrease) in Cash
and Cash Equivalents 141,046 (148,521)
Cash and Cash Equivalents
at Beginning of Period 573,379 719,053
Cash and Cash Equivalents
at End of Period $714,425 $570,532
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
consolidatedfinancial 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
1994 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 sixmonth period ended June
30, 1995 are not necessarily indicative of the results to
be expected for the full year ending December 31, 1995.
These unaudited condensedconsolidated 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, 1994.
B. Per common share amounts have been calculated using
netincome after dividends on nonconvertible preferred
stock, divided by the weighted average number of common
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 share.
C. Consumer loans have been reduced by the sale,
withoutrecourse, of unsecured receivables under asset
securitization plans during 1995 of $1.1 billion. Total
unsecured consumer receivables outstanding under
securitization plans were $3.3 billion at June 30, 1995.
In addition, there were $87.5 million of consumer loans
in the process of securitization at June 30, 1995.
D. An analysis of the allowance for loan losses on
consumerand mortgage loans for the six month periods ended
June 30, 1995 and 1994 is as follows:
Consumer Mortgage
Six Months Ended June 30 1995 1994 1995 1994
(Dollars in Thousands)
Balance at beginning of period $76,218 $75,061 $52,200 $51,362
Current period provision 18,580 14,083 8,144 12,440
Current period chargeoffs,
net of recoveries (31,589) (26,114) (14,507) (10,856)
Balance at end of period $63,209 $63,030 $45,837 $52,946
E. During the six months ended June 30, 1995, the
Companyissued $84.035 million of Series D medium-term
notes with maturities ranging from seven to 30 years and
interest rates ranging from 6.85 percent to 8.53
percent. The proceeds from these debt issuances are
being used to fund 1995 maturities of long-term debt.
In addition, Series A mediumterm notes totaling $24.0
million matured during June 1995. Subsequent to June 30,
1995 and through August 8, 1995, an additional $55.0
million of Series A mediumterm notes matured
.
F. During the six months ended June 30, 1995, the
Companyrepurchased 2,514,700 shares of its common
stock at an average price of $34.97 per share. During
July, the Company repurchased 150,900 additional
shares at an average price of $36.94 per share,
completing the repurchase program announced in March
1995.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
This item presents specific comments on material changes to
the Company's results of operations, financial condition,
liquidity and capital resources for the periods reflected in
the condensed consolidated financial statements filed with
this report. This analysis should be read in conjunction
with the financial statements, footnotes and management's
discussion and analysis included in the Company's annual
report on Form 10-K for the year ended December 31, 1994 and
the Company's quarterly report on Form 10-Q for the quarter
ended March 31, 1995.
Results of Operations
The following discussion compares the results of operations
for the six months ended June 30, 1995 to the six months
ended June 30, 1994. The nature and reasons for any
significant variations between the quarters ended June 30,
1995 and June 30, 1994 are the same as those discussed below
for therespective six month periods, except where otherwise
noted herein.
Consolidated Results
Providian's net income for the quarter ended June 30, 1995
was $.88 per common share, up 7.3 percent from the $.82 per
common share reported last year. Net income for the six
months ended June 30, 1995 was $1.59 per common share, up
10.4 percent from 1994. Net income for the six months
endedJune 30, 1995 includes pretax realized losses of $50.3
million, comprised of realized losses on investment and
securities transactions of $42.2 million and $8.1 million in
provisions for mortgage loan losses.
Earnings, as discussed herein, exclude realized investment
losses, net of related deferred acquisition cost amortization
and tax, and dividends on the preferred stock of a
consolidated subsidiary. Earnings for the three months ended
June 30, 1995 were $1.00 per common share, up 7.5 percent
from the same period last year. Earnings year to date were
$1.96 per common share, up 7.1 percent from the $1.83 per
common share reported in 1994. he discussion included under
"Business Segment Results" highlights the key items
contributing to the growth in earnings by each business
group.
Revenues, as discussed herein, exclude realized investment
losses. Consolidated revenues for the six months were $1.7
billion, up 13.9 percent from the $1.5 billion reported in
the prior year, primarily due to increases in investment
income, premiums and other considerations and other income.
The increase in investment income of $151.8 million, or 19.5
percent, is attributable to the effect of the higher interest
rate environment on yields and growth in invested assets.
Premiums and other considerations increased by $26.7 million,
or 4.6 percent, primarily from growth in life premium in
force and life annuity sales. Other income increased by
$21.4 million primarily due to growth in fee-based income.
Total benefits and expenses for the six months ended June 30,
1995 were up $195.9 million, or 15.9 percent, over the same
period in the prior year. This increase was the result of
increases in benefit and contract reserves, general,
administrative and other expenses and interest expense,
offset slightly by a decrease in amortization of deferred
policy and loan acquisition costs. Benefit and contract
reserves increased by $132.6 million, or 43.2 percent, during
1995 due to higher accruals for credited interest on
policyholder balances resulting from the higher interest rate
environment during the first six months of 1995 as compared
to 1994. General, administrative and other expenses are up by
$67.3 million, or 26.6 percent, due to growth in business
volume and the reduction in the deferral of acquisition costs
at Providian Bancorp. This explanation also accounts for the
22.9 percent decrease from the prior year in the amortization
line. Interest expense is up $11.8 million, or 27.4 percent,
due to increased levels of corporate debt and higher interest
rates on short-term borrowings in 1995 as compared to 1994.
Business Segment Results
Providian Agency Group
Providian Agency Group pretax earnings were $90.3 million for
the six month period ended June 30, 1995, down 2.1 percent
from the same period in 1994. Earnings decreased primarily
due to higher mortality levels, resulting from an increase in
the number of large claims, increased cancer claims
experience andthe expected narrowing of interest spreads.
Partially offsetting these factors were life premium growth,
the continued benefit of cost management initiatives and
higher investment income.
Individual life pretax earnings, which account for most of
Providian Agency Group income, were $87.9 million, down 2.9
percent from the prior year. Life premiums were up $8.4
million, or 4.9 percent, due to growth in premium in force.
Sales for the six months were up 7.7 percent over 1994,
including an 8.6 percent improvement in life sales. Field
management initiatives resulted in increased sales per agent
over 1994 levels. The combined life and health policy
termination rate of 13.9 percent has improved from the 14.5
percent rate for the full year 1994, although it is slightly
higher than the six month 1994 rate of 13.7 percent.
Providian Direct Insurance
Providian Direct Insurance ("PDI") continued its solid
performance with pretax earnings of $57.0 million for the six
month period ended June 30, 1995, up 11.1 percent over the
same period in 1994. The increase reflects growth in life
premiums and fee-based product income, and a continued focus
on cost management.
Life, Health and Other pretax earnings increased 11.0 percent
to $52.4 million. Property and Casualty pretax earnings of
$4.6 million were improved from prior year results despite
losses of $1.1 million from second quarter hail storms in
Texas and the Southeast. Life profit margins (defined as
pretax earnings as a percentage of premium income) were 22.2
percent, improved from last year's 20.7 percent due to lower
operating expenses. Health profit margins (defined as pretax
earnings as a percentage of premium income) were 21.4
percent, up slightly from last year due to lower operating
expenses and fee-based product growth. The Property and
Casualty combined ratio (defined as the ratio of total
dollars of claims and expenses incurred for each $100 of
premiums) continues to show a positive trend at 104.9
percent, compared to 105.3 percent for the second quarter of
1994, the result of reunderwriting and integration efforts in
the military auto business.
PDI life premiums were up 4.3 percent to $161.7 million
primarilydue to increased premiums from a credit union joint
venture arrangement and the March 1995 acquisition of a block
of life business. Health premiums, however, declined 3.1
percent as lapsations were not yet offset by increased sales
and retention efforts. Total sales increased $4.2 million, or
7.1 percent, from 1994 levels, driven by a significant
improvement in health sales of $7.1 million due to new
customer sales in the direct response channels, fee-based
product sales and the credit union joint venture arrangement.
Property and Casualty sales also increased from prior year by
$1.0 million due to positive results in direct response auto.
Health and Property and Casualty sales increases were offset
by a $3.8 million decrease in life sales from fewer sales to
existing customers.
Providian Bancorp
Providian Bancorp's outstanding earnings growth continued
with pretax earnings of $88.3 million for the six months of
1995, up 25.5 percent from 1994. These results reflect
strong net interest margins, continued growth in unsecured
and home equity loan products, as well as growth in fee-based
income.
Total managed loans, including $3.3 billion of securitized
receivables and $87.5 million in the process of
securitization,were $5.6 billion at June 30, 1995, up 39.9
percent over June 30, 1994 balances. The continued success
of the Primary Lender strategy and the variable rate First
Gold product has contributed strongly to the $1.4 billion
growth in unsecured receivables since June 30, 1994.
Unsecured receivable balances increased $800.3 million since
December 31, 1994. The Primary Lender strategy, which offers
custom-tailored services to fulfill the individual needs of
valuable customers, is a significant reason for this
increase. Additionally, the Select Equity loan portfolios
reflected solid growth of $192.2 million over June 30, 1994
balances.
Return on mean assets for the six months at 6.8 percent was
essentially even with the six month 1994 return. Loan loss
reserves related to unsecured consumer receivables, excluding
securitized receivables and those in the process of
securitization, were 3.9 percent at June 30, 1995 as compared
to 5.6 percent at June 30, 1994. Net credit losses for
unsecured receivables (before securitization) were 4.4
percent for the six months ended June 30, 1995, improved from
5.0
percent for the same period last year. Balances past due
greater than 30 days related to unsecured consumer
receivables, excluding those previously securitized,
decreased to 2.0 percent at June 30, 1995 compared to 2.3
percent at June 30, 1994. The following table summarizes
dollar amounts of unsecuritized problem consumer loans as of
June 30, 1995 and December 31, 1994:
June 30, December 31,
1995 1994
(Dollars in Millions)
Non-accrual loans $ 6.8 $ 7.2
Loans past due
greater than 30 days 52.5 59.5
Total problem
consumer loans $ 59.3 $ 66.7
There were no additional specifically identified consumer
loans that represented significant potential problems.
Providian Capital Management
Providian Capital Management ("PCM") pretax earnings were
$61.8 million for the six months ended June 30, 1995, down
14.9percent from the same period last year. The decrease in
earnings is the result of the significant rise in interest
rates throughout 1994 which continued to compress spread-
based margins during 1995. Partially offsetting the decrease
in spread-based margins were increases in fee income,
invested asset growth and reduced amortization of retail
acquisition costs. Profit margins on spread-based deposits
for the six months ended June 30, 1995 were 86 basis points,
down from 116 basis points in the same period last year. The
decline in short- to intermediateterm interest rates from
year-end 1994 levels should result in improving spreadbased
margins and earnings for the remainder of 1995 compared to
the first half of the year.
To more appropriately align the focus on serving the
retirement and savings marketplace, PCM changed the
Institutional and Retail names for its product segments to
Group and Individual, respectively. In addition, PCM also
combined the Group and Individual product development areas
to take advantage of potential synergies within the
retirement and savings
marketplace.
PCM continues to focus on growing the Individual and Group
fee-based and the Individual spread-based businesses.
Individual fee-based deposits grew 25.6 percent during the
six months ended June 30, 1995, bringing the balance to $1.3
billion. Higher product sales and positive market growth
contributed to the increase. The Group fee-based Trust GIC
products grew $1.9 billion from year end, reflecting
continuing demand for these innovative products. Individual
spread-based product balances were up $706.5 million from
year-end balances due mostly to a coinsurance agreement
entered into with North American Security Life Insurance
Company (NASL), effective June 30, 1995. This agreement
coinsures more than $720 million of existing deposits of
NASL's fixed annuities and the fixed account portion of their
variable annuity product business. In addition, this
agreement also includes prospective coinsurance of additional
annual fixed annuity deposits from the future sales of NASL's
fixed and variable annuities. Group spreadbased deposits
increased $130.9 million due to increased fixedrate GIC
deposits and the market value growth of its indexedbased
deposits resulting from the stock and bond market rallies in
1995. PCM is continuing its previously announced strategy to
manage Group spread-based deposit growth to approximately
zero for 1995, with the increases to date offsetting
maturities expected later in the year.
Analysis of Financial Condition
Significant variations between June 30, 1995 and December 31,
1994 balance sheet items are discussed in the
"Asset/Liability Review" and "Liquidity and Capital Resource"
sections below.
Asset/Liability Review
Cash and invested assets were $20.9 billion, up 8.4 percent
from December 31, 1994. Excluding Providian Bancorp,
invested assets related to insurance operations were $18.5
billion compared to $16.8 billion at December 31, 1994. This
increase is attributable to the increase in market value of
the invested asset portfolio as a result of the significant
decrease in interest rates during the first half of 1995 and
the coinsurance agreement with NASL. The distribution of
invested assets at June 30, 1995 has not changed
significantly from December 31, 1994.
Exposure to below investment grade bonds, preferred stocks
and investments in limited partnerships with below investment
grade characteristics at June 30, 1995 was 5.4 percent,
compared to 5.5 percent at December 31, 1994. Default and
loss experience in the securities portfolio is excellent with
no defaults and no significant losses as a result of
impairments this year. As of June 30, 1995, there were no
securities in the bond or preferred stock portfolios that
were delinquent as to interest or dividends.
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, 1995, amounted to
4.4 percent of outstanding commercialloans, down from 4.6
percent at December 31, 1994. The industry average for
problem commercial mortgage loans was 17.7 percent at March
31, 1995 (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 2.7 percent and 1.5 percent at
June 30, 1995 and December 31, 1994, respectively. The MBA
average for problem residential mortgage loans was 4.5
percent at March 31, 1995 (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, 1995 and December 31, 1994 were as follows:
Commercial Loans Residential Loans
June 30 December 31 June 30 December 31
1995 1994 1995 1994
(Dollars in Millions)
Non-accrual loans $ 20.4 $ 68.2 $ 22.2 $ 10.7
Restructured loans,
accruing interest 13.5 4.3
$33.9 $72.5 $ 22.2 $ 10.7
Non-accrual commercial loans decreased by $47.8 million from
year end 1994, primarily due to $32.4 million of loans placed
in foreclosure during the first six months of 1995. As of
June 30, 1995, there were approximately $40.9 million of
commercial mortgage loans with identified potential problems
which could cause these loans to be included in a problem
category in the future; the Company does not anticipate any
material additional losses to arise from these loans.
The decrease in interest rates during the first half of 1995
and resulting increases in the fair value of the Company's
available for sale investment portfolio caused the net
unrealized investment gain (loss) component of shareholders'
equity to significantly change from the year-end balance.
The adjustments to record the effect of the unrealized
investment gains (losses) on shareholders' equity and the
related balance sheet accounts are as follows:
June 30 December 31,
1994 1995
(Dollars in Millions)
Unrealized investment gain (loss)
on available for sale securities $ 238,608 $ (609,123)
Adjusted by:
Increase (decrease) in deferred
policy acquisition costs (3,056) 79,083
Decrease (increase) in deferred
federal income taxes (82,413) 185,514
Net unrealized investment gain
(loss)on available for
sale securities $ 153,139 $ (344,526)
Liquidity and Capital Resources
Providian is a legal entity, separate and distinct from
itssubsidiaries and has no business operations. The 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.
Net cash flows from operations were $705.8 million during the
six months, compared to $463.7 million last year. The
increase over last year related to lower federal income taxes
paid during the first half of 1995 as compared to 1994.
Additionally, the increase was a result of higher investment
income received due to higher yields and growth in invested
assets offset by higher accruals for credited interest on
policyholder balances as a result of the higher interest rate
environment.
Investment commitments are planned to coincide with expected
cash flows. Normal day-to-day cash variations are met by a
commercial paper program, supplemented by committed lines of
credit. Commercial paper borrowings averaged $59.9 million
during the six months at a weighted average interest rate of
6.06 percent. Commercial paper outstandings at June 30, 1995
were $24.8 million.
The Company has committed lines of credit of $850.0 million
which would provide additional liquidity should adverse
conditions materialize, and as back-up to the commercial
paper program. At June 30, 1995 there were no borrowings
under these lines of credit. In addition, the Company's bond
and stock portfolio of $11.3 billion at June 30, 1995
provides a significant source of short-term liquidity.
Providian Bancorp analyzes its current and future liquidity
needs to support its deposit portfolio and asset growth and
has a $500 million credit agreement. The agreement provides
liquidity for the existing deposit base as well as satisfying
short-term funding requirements. Outstanding borrowings
under the agreement were $125.0 million at June 30, 1995.
The Company issued $84.035 million of its Series D medium-
term notes during the first half of 1995. The proceeds from
these issuances are being used to fund 1995 maturities of
long-term debt. As of June 30, 1995, $24.0 million of Series
A mediumterm notes had matured. Subsequent to June 30, 1995
and through August 8, 1995, an additional $55.0 million of
Series A mediumterm notes matured.
During the first six months of 1995, Providian repurchased
2,514,700 shares of its common stock at an average price of
$34.97 per share. During July, the Company repurchased
150,900 shares at an average price of $36.94 per share. The
share repurchases in July completed the repurchase program
previously announced in March 1995.
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
Effective July 17, 1995, Robert Greer, CLU, joined
the Company's Agency Group as chief operating officer
and president of Commonwealth Life Insurance,
People's Security Insurance, and Capital Security
Insurance. Prior to joining the Company, Mr. Greer
was president of the Home Service Division of United
Insurance Company of America, Union National Life
Insurance Company and Union National Fire Insurance
Company. These companies are all part of the
UNITRIN, Inc. holding company.
Item 6. Exhibits and Reports on Form 8-K
Exhibits: Exhibit 10 - Material Contracts
Reports: None
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 11, 1995 Robert L. Walker
Senior Vice President Finance
and ChiefFinancial Officer
Date: August 11, 1995 Steven T. Downey
Vice President and Controller
PROVIDIAN CORPORATION AND SUBSIDIARIES
LIST AND INDEX OF EXHIBITS
Reference Number Description of Exhibit
Per Exhibit Table Exhibit Number Page
(10) Employment Agreement 10.1 --
between Providian
Corporation and Rudy R.
Gernert. (Provided
as part of electronic submission)
