SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year Ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission file number: 1-6701
Full title of the Plan: Providian Corporation Thrift Savings Plan
Name of issuer of the securities held pursuant to the Plan
and the address of its principal executive office:
Providian Corporation
Providian Center
400 W Market Street
Louisville, Kentucky 40202
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Plan Administrator has duly caused this annual report to be signed by the
undersigned thereunto duly authorized.
PROVIDIAN CORPORATION
/S/ROGER L. SMITH
ROGER L. SMITH
PLAN ADMINISTRATOR
May 31, 1996
<PAGE>
Audited Financial Statements and Schedules
PROVIDIAN CORPORATION THRIFT SAVINGS PLAN
Years ended December 31, 1995 and 1994
Audited Financial Statements
Report of Independent Auditors...................................... 1
Statements of Net Assets Available for Plan Benefits................ 2-3
Statements of Changes in Net Assets Available
for Plan Benefits................................................. 4-5
Notes to Financial Statements....................................... 6-13
Schedules
Item 27a - Schedule of Assets Held for Investment Purposes.......... 14-15
Item 27d - Schedule of Reportable Transactions......................... 16
<PAGE>
- 4 -
REPORT OF INDEPENDENT AUDITORS
Plan Administrator
Providian Corporation Thrift Savings Plan
We have audited the accompanying statements of net assets available for plan
benefits of Providian Corporation Thrift Savings Plan as of December 31, 1995
and 1994, and the related statements of changes in net assets available for
plan benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan
at December 31, 1995 and 1994, and the changes in its net assets available for
plan benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of assets held for investment purposes as of December 31, 1995, and reportable
transactions for the year ended December 31, 1995, are presented for purposes of
complying with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974, and are
not a required part of the basic financial statements. The fund information in
the financial statements is presented for purposes of additional analysis rather
than to present the financial condition and income and changes in plan equity of
each fund. The supplemental schedules and fund information have been subjected
to the auditing procedures applied in our audit of the basic financial
statements and, in our opinion, are fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
/S/ERNST & YOUNG LLP
May 27, 1996
<PAGE>
<TABLE>
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
PROVIDIAN CORPORATION THRIFT SAVINGS PLAN
December 31, 1995
<CAPTION>
Merrill Merrill
Providian Providian Providian Lynch Global Lynch
Common Stock Equity Index Stable Value Allocation Corporate
Total Funds Fund Fund Fund Fund Bond Fund
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
Providian Corporation
common stock $ 98,569,116 $ 98,569,116
Guaranteed interest
contracts 64,679,453 $ 64,679,453
Investments in registered
mutual funds 22,192,590 4,236,440 $ 1,280,546 $ 2,825,679
Temporary investments 19,747,486 $ 19,747,486
Loans receivable from
participants 5,420,225
------------ ------------ ------------ ------------ ------------ -----------
210,608,870 98,569,116 19,747,486 68,915,893 1,280,546 2,825,679
Cash 115,052 55,068 11,018 38,560 689 1,606
Accrued income on
investments 44,211 21,221 4,244 14,855 265 619
Contributions receivable
from participating
employers 1,517,015 728,167 145,633 509,717 9,103 21,238
Contributions receivable
from participating
employees 326,322 131,826 26,365 92,278 1,648 3,845
Miscellaneous receivable 26,560 12,749 2,550 8,924 159 372
------------ ------------ ------------ ------------ ------------ ------------
$212,638,030 $ 99,518,147 $ 19,937,296 $ 69,580,227 $ 1,292,410 $ 2,853,359
LIABILITIES AND NET ASSETS
AVAILABLE FOR PLAN BENEFITS
Miscellaneous payable $ 309
Net assets available
for plan benefits 212,637,721 $99,518,147 $19,937,296 $69,580,227 $1,292,410 $2,853,359
--------------- -------------- -------------- -------------- -------------- -------------
$212,638,030 $99,518,147 $19,937,296 $69,580,227 $1,292,410 $2,853,359
See notes to financial statements.
</TABLE>
<TABLE>
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
PROVIDIAN CORPORATION THRIFT SAVINGS PLAN
December 31, 1995
<CAPTION>
Merrill Lynch Merrill Lynch Merrill Lynch Fidelity Delaware
Basic Asset Income Asset Growth Advisor Group Templeton
Value Fund Fund Fund Growth Fund Trend Fund Foreign Fund Loan Fund
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
Providian Corporation
common stock
Guaranteed interest
contracts
Investments in registered
mutual funds $2,424,517 $785,950 $386,121 $5,240,511 $1,480,781 $3,532,045
Temporary investments
Loans receivable from
participants $5,420,225
------------- -------------- ---------------------------- -------------- -------------------------
2,424,517 785,950 386,121 5,240,511 1,480,781 3,532,045 5,420,225
Cash 1,378 459 226 2,984 804 1,951 309
Accrued income on
investments 531 177 89 1,149 309 752
Contributions receivable
from participating
employers 18,204 6,068 3,035 39,442 10,619 25,789
Contributions receivable
from participating
employees 3,296 1,099 548 7,141 1,922 4,669 51,685
Miscellaneous receivable 319 106 52 691 186 452
------------- -------------- ---------------------------- -------------- -------------- ---------
$2,448,245 $793,859 $390,071 $5,291,918 $1,494,621 $3,565,658 $5,472,219
LIABILITIES AND NET ASSETS
AVAILABLE FOR PLAN BENEFITS
Miscellaneous payable $ 309
Net assets available
for plan benefits $2,448,245 $793,859 $390,071 $5,291,918 $1,494,621 $3,565,658 5,471,910
------------- -------------- ---------------------------- -------------- ------------- -----------
$2,448,245 $793,859 $390,071 $5,291,918 $1,494,621 $3,565,658 $5,472,219
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
PROVIDIAN CORPORATION THRIFT SAVINGS PLAN
December 31, 1994
Merrill Merrill
<CAPTION>
Providian Providian Providian Lynch Global Lynch
Common Stock Equity Index Stable Value Allocation Corporate
Total Funds Fund Fund Fund Fund Bond Fund
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
Providian Corporation
common stock $ 76,908,742 $76,908,742
Guaranteed interest
contracts 64,062,836 $64,062,836
Investments in registered
mutual funds 15,412,398 6,026,159 $ 994,759 $1,183,555
Temporary investments 13,860,201 $13,860,201
Loans receivable from
participants 4,953,424
--------------- -------------- -------------- -------------- -------------- --------------
175,197,601 76,908,742 13,860,201 70,088,995 994,759 1,183,555
Cash 183,071 54,820 15,145 75,762 1,088 1,292
Accrued income on
investments 21,312 9,628 1,735 8,774 125 148
Contributions receivable
from participating
employers 1,776,416 242,074 86,252 1,312,416 11,593 8,667
Contributions receivable
from participating
employees 330,835 130,535 23,524 118,960 1,688 2,009
Miscellaneous receivable 40,747 1,269 229 19,323 16 99
--------------- -------------- -------------- -------------- -------------- --------------
$177,549,982 $77,347,068 $13,987,086 $71,624,230 $1,009,269 $1,195,770
LIABILITIES AND NET ASSETS
AVAILABLE FOR PLAN BENEFITS
Miscellaneous payable $ 41,659 $ 8,200 $ 946 $ 4,784 $ 68 $ 80
=
Net assets available
for plan benefits 177,508,323 77,338,868 13,986,140 71,619,446 1,009,201 1,195,690
=
--------------- -------------- -------------- -------------- -------------- --------------
$177,549,982 $77,347,068 $13,987,086 $71,624,230 $1,009,269 $1,195,770
See notes to financial statements.
<PAGE>
</TABLE>
<TABLE>
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
PROVIDIAN CORPORATION THRIFT SAVINGS PLAN
December 31, 1994
<CAPTION>
Merrill Lynch Merrill Lynch Merrill Lynch Fidelity Delaware
Basic Asset Income Asset Growth Advisor Group Templeton
Value Fund Fund Fund Growth Fund Trend Fund Foreign Fund Loan Fund
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
Providian Corporation
common stock
Guaranteed interest
contracts
Investments in registered
mutual funds $838,397 $487,763 $405,876 $2,482,596 $577,859 $2,415,434
Temporary investments
Loans receivable from
participants $4,953,424
-------------- -------------- ------------------------------------ -------------- --------------
838,397 487,763 405,876 2,482,596 577,859 2,415,434 4,953,424
Cash 916 533 443 2,712 631 2,639 27,090
Accrued income on
investments 105 61 51 311 72 302
Contributions receivable
from participating
employers 20,958 11,672 4,838 37,555 9,232 31,159
Contributions receivable
from participating
employees 1,423 828 689 4,214 980 4,100 41,885
Miscellaneous receivable 14 8 7 19,494 169 119
-------------- -------------- ------------------------------------- ------------------------
$861,813 $500,865 $411,904 $2,546,882 $588,943 $2,453,753 $5,022,399
LIABILITIES AND NET ASSETS
AVAILABLE FOR PLAN BENEFITS
Miscellaneous payable $ 57 $ 33 $ 28 $ 169 $ 39 $ 165 $ 27,090
Net assets available
for plan benefits 861,756 500,832 411,876 2,546,713 588,904 2,453,588 4,995,309
-------------- -------------- --------------------------- -------------- ------------ --------------
$861,813 $500,865 $411,904 $2,546,882 $588,943 $2,453,753 $5,022,399
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
===============================================================================
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
===============================================================================
PROVIDIAN CORPORATION THRIFT SAVINGS PLAN
For the Year Ended December 31, 1995
Merrill Merrill
<CAPTION>
Providian Providian Providian Lynch Global Lynch
Common Stock Equity Index Stable Value Allocation Corporate
Total Funds Fund Fund Fund Fund Bond Fund
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends $ 3,004,265 $ 2,219,398 $ 102,584 $ 120,615
Interest and other 5,406,608 236,280 $ 48,343 $ 5,087,591 2,061 3,114
Net appreciation
(depreciation) in fair
value of investments 31,407,551 24,085,046 5,378,001 134,735 185,607
Contributions from
participating employers 5,913,749 5,049,502 151,433 570,192 9,882 21,784
Contributions from
participating employees 11,533,139 5,143,847 1,349,290 3,182,621 175,183 143,413
---------------- ---------------- ---------------- --------------- -------------- -------------
57,265,312 36,734,073 6,927,067 8,840,404 424,445 474,533
Distributions from the
plan, net (21,793,017) (9,080,653) (1,401,621) (9,294,753) (132,132) (88,092)
Administrative expenses (342,897) (200,237) (6,055) (132,272) (378) (409)
Net participant transfers
between funds - (5,273,904) 431,765 (1,452,598) (8,726) 1,271,637
---------------- ---------------- ---------------- --------------- -------------- -------------
(22,135,914) (14,554,794) (975,911) (10,879,623) (141,236) 1,183,136
NET INCREASE (DECREASE) 35,129,398 22,179,279 5,951,156 (2,039,219) 283,209 1,657,669
Net assets available
for plan benefits at
beginning of year 177,508,323 77,338,868 13,986,140 71,619,446 1,009,201 1,195,690
---------------- ---------------- ---------------- --------------- -------------- -------------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS AT
END OF YEAR $212,637,721 $99,518,147 $19,937,296 $69,580,227 $1,292,410 $2,853,359
================ ================ ================ =============== ============== =============
See notes to financial statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
=============================================================================
PROVIDIAN CORPORATION THRIFT SAVINGS PLAN
For the Year Ended December 31, 1995
Merrill Lynch Merrill Lynch Merrill Lynch Fidelity Delaware
Basic Asset Income Asset Growth Advisor Group Templeton
Value Fund Fund Fund Growth Fund Trend Fund Foreign Fund Loan Fund
------------------------------------------------------------------------------------------------------
Investment income:
Dividends $ 96,799 $ 41,897 $ 8,775 $ 127,877 $ 67,354 $ 218,966
Interest and other 3,586 1,188 1,459 11,474 2,853 8,659
Net appreciation
(depreciation) in fair
value of investments 290,431 53,989 18,490 894,030 274,974 92,248
Contributions from
participating employers 19,613 6,853 3,393 41,963 11,254 27,880
Contributions from
participating employees 181,894 54,142 131,825 557,981 156,930 446,213 $ 9,800
--------------------------- ----------------------------- -------------- ------------- -------------
592,323 158,069 163,942 1,633,325 513,365 793,966 9,800
Distributions from the
plan, net (228,485) (36,902) (28,921) (323,452) (200,303) (212,275) (765,428)
Administrative expenses (476) (213) (236) (1,329) (358) (934)
Net participant transfers
between funds 1,223,127 172,073 (156,590) 1,436,661 593,013 531,313 1,232,229
--------------------------- ----------------------------- -------------- ------------- -------------
994,166 134,958 (185,747) 1,111,880 392,352 318,104 466,801
NET INCREASE (DECREASE) 1,586,489 293,027 (21,805) 2,745,205 905,717 1,112,070 476,601
Net assets available
for plan benefits at
beginning of year 861,756 500,832 411,876 2,546,713 588,904 2,453,588 4,995,309
--------------------------- ----------------------------- -------------- ------------- -------------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS AT
END OF YEAR $2,448,245 $793,859 $390,071 $5,291,918 $1,494,621 $3,565,658 $5,471,910
=========================== ============================= ============== ============= =============
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
PROVIDIAN CORPORATION THRIFT SAVINGS PLAN
For the Year Ended December 31, 1994
<CAPTION>
Merrill Merrill
Providian Providian Providian Lynch Global Lynch
Common Stock Equity Index Stable Value Allocation Corporate
Total Funds Fund Fund Fund Fund Bond Fund
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends $ 1,989,769 $ 1,916,294 $ 35,110 $ 14,001
Interest and other 4,913,877 102,584 $ 356,696 $ 4,180,532 463 567
- -
Net appreciation
(depreciation) in fair
value of investments (15,031,336) (14,579,305) 37,832 8,047 (57,521) (9,222)
Contributions from
participating employers 6,116,013 4,485,227 87,049 1,408,063 11,593 8,667
Contributions from
participating employees 12,485,468 5,736,523 1,813,994 4,512,601 46,533 49,528
Transfers for mergers of
National Home and
Academy Plans 39,017,244 2,006,718 2,730,423 34,280,103
---------------- ---------------- ---------------- --------------- -------------- -------------
49,491,035 (331,959) 5,025,994 44,389,346 36,178 63,541
Distributions from the
plan, net (15,472,204) (7,646,397) (1,101,625) (6,527,889) (4,801) (2,287)
Administrative expenses (190,565) (107,044) (40,071) (42,348) (115) (70)
Net participant transfers
between funds - (1,230,625) (2,956,078) (6,075,618) 977,939 1,134,506
---------------- ---------------- ---------------- --------------- -------------- -------------
(15,662,769) (8,984,066) (4,097,774) (12,645,855) 973,023 1,132,149
NET INCREASE (DECREASE) 33,828,266 (9,316,025) 928,220 31,743,491 1,009,201 1,195,690
Net assets available
for plan benefits at
beginning of year 143,680,057 86,654,893 13,057,920 39,875,955 - -
---------------- ---------------- ---------------- --------------- -------------- -------------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS AT
END OF YEAR $177,508,323 $77,338,868 $13,986,140 $71,619,446 $1,009,201 $1,195,690
================ ================ ================ =============== ============== =============
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
PROVIDIAN CORPORATION THRIFT SAVINGS PLAN
For the Year Ended December 31, 1994
<CAPTION>
Merrill Lynch Merrill Lynch Merrill Lynch Fidelity Delaware
Basic Asset Income Asset Growth Advisor Group Templeton
Value Fund Fund Fund Growth Fund Trend Fund Foreign Fund Loan Fund
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends $ 16,565 $ 6,267 $ 1,532
Interest and other 420 276 237 $ 126,533 $ 372 $ 137,815 $ 7,382
- -
Net appreciation
(depreciation) in fair
value of investments (22,762) (9,851) (18,163) (138,006) (15,696) (226,689)
Contributions from
participating employers 20,958 11,672 4,838 37,555 9,232 31,159
Contributions from
participating employees 25,547 20,450 21,858 89,253 27,502 99,794 41,885
Transfers for mergers of
National Home and
Academy Plans
-------------------------- ---------------------------- -------------- ------------- -------------
40,728 28,814 10,302 115,335 21,410 42,079 49,267
Distributions from the
plan, net (4,168) (5,898) (6,505) (5,256) (344) (167,034)
Administrative expenses (77) (80) (52) (313) (69) (326)
Net participant transfers
between funds 825,273 477,996 408,131 2,436,947 567,563 2,412,179 1,021,787
-------------------------- ---------------------------- -------------- ------------- -------------
821,028 472,018 401,574 2,431,378 567,494 2,411,509 854,753
NET INCREASE (DECREASE) 861,756 500,832 411,876 2,546,713 588,904 2,453,588 904,020
Net assets available
for plan benefits at
beginning of year - - - - - - 4,091,289
NET ASSETS AVAILABLE FOR
PLAN BENEFITS AT
END OF YEAR $861,756 $500,832 $411,876 $2,546,713 $588,904 $2,453,588 $4,995,309
================ ================ ================ =============== ============== ============
See notes to financial statements.
</TABLE>
<PAGE>
=============================================================================
NOTES TO FINANCIAL STATEMENTS - CONTINUED
=============================================================================
PROVIDIAN CORPORATION THRIFT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
PROVIDIAN CORPORATION THRIFT SAVINGS PLAN
December 31, 1995 and 1994
NOTE A - SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements of the Providian Thrift Savings Plan(the
Plan) have been prepared on an accrual basis in accordance with generally
accepted accounting principles (GAAP). The preparation of financial statements
in conformity with GAAP requires the Plan's management to make estimates and
assumptions that affect the amounts reported in the financial statements and the
accompanying notes. Actual results could differ from those estimates.
Securities which are traded on a national securities exchange are valued at the
last reported sales price on the last business day of the year. Shares of
registered mutual funds are valued at quoted market prices which represent the
net asset value of shares held by the Plan at year-end. The guaranteed interest
contracts with Commonwealth Life Insurance Company (Commonwealth), a subsidiary
of Providian Corporation (Providian), are stated at cost plus accrued interest
(contract value) which approximates fair value. Temporary investments are stated
at current market value which approximates cost. Loans receivable from
participants are carried at unpaid principal balances. The Plan presents in the
statement of changes in net assets the net appreciation (depreciation) in the
fair value of its investments which consists of the realized gains or losses and
the unrealized appreciation (depreciation) on those investments. The daily
change in market value of futures contracts is included in net appreciation
(depreciation) in fair value of investments. Margin requirements on futures
contracts, equal to the change in market value, usually are settled on a daily
basis.
Effective July 1, 1994, Merrill Lynch Trust Company was appointed as Trustee of
the Plan (Trustee). The Trustee, in accordance with the Trust Agreement, has
exclusive authority and discretion to manage and control the trust funds, except
that Providian Capital Management, Inc., a subsidiary of Providian, serves as
the investment manager for the Providian Equity Index Fund. A description of
these funds, and the additional investment funds now provided under the Plan, is
included in Note B.
Prior to July 1, 1994, Liberty National Bank and Trust Company served as Trustee
to administer the Plan's assets and make investment decisions relating to the
Providian Common Stock Fund. Providian, through a Review Committee, had the
investment responsibility relating to the Providian Equity Index Fund.
<PAGE>
NOTE A - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Trustee accounts for loans receivable as a separate fund. Accordingly, such
loans and related activity are shown as a separate fund (Loan Fund) in the
accompanying financial statements. Distributions from the Loan Fund represent
withdrawals from the Plan which are used to repay a participant's note. All
other normal borrowings and payments, including interest charged on outstanding
loans, are reflected in fund transfers.
The Plan does not report requested distributions from the Plan, that have not
yet been paid, as a liability in the Statements of Net Assets Available for Plan
Benefits or as a distribution from the Plan in the Statements of Changes in Net
Assets Available for Plan Benefits. Such amounts are not deducted from the
Plan's net assets available for plan benefits until paid. However, for
presentation in Form 5500, the Department of Labor (DOL) continues to require
such amounts to be included in liabilities and distributions from the Plan.
Using the DOL prescribed method, accounts and other payables in Form 5500 were
$105,106 and $218,877 at December 31, 1995 and 1994, respectively, while
distributions from the Plan were $21,720,596 and $11,485,082 in 1995 and 1994,
respectively.
The Plan provides that all costs and expenses incurred in administering the
Plan, including the fees and expenses of the Trustee, are to be paid by the
Plan, unless they are paid by the employer. The Plan incurred administrative
costs totaling $342,897 and $190,565 during 1995 and 1994, respectively.
NOTE B - DESCRIPTION OF THE PLAN
The following description of the Plan provides only general information.
Participants should refer to the Plan document for a complete description of the
Plan's provisions.
The Plan was established on January 1, 1965. Prior to 1981, participation in the
Plan was limited to qualified employees of Providian and certain of its
subsidiaries. Effective January 1, 1981, the Plan was amended to allow
participation by qualified employees of all Providian subsidiaries who elect to
participate, and was renamed and restated in its entirety. The Plan was amended
effective various dates to incorporate certain additional changes which are
reflected below.
The Plan is a defined contribution plan and is funded on a current basis with
contributions from participants and their employers.
Each person who is an employee of Providian or a participating subsidiary is
eligible to become a participant as soon as administratively feasible following
completion of one year of service.
Effective September 26, 1994, participants may elect to contribute an amount not
less than 1% nor more than 15% of their earnings. Prior to September 26, 1994,
the maximum contribution to the Plan could not exceed 11% of participants'
earnings. Participants' contributions can be made on a pre-tax or after-tax
basis. Rollovers from other qualified plans are permitted. The employer match,
up to the first 6% of participants' contributions, was at the following rates
for 1995 and 1994:
55% of eligible contributions invested in the Providian Stock Fund
50% of eligible contributions invested in any other investment fund provided
for in the Plan
In addition to the employer matching contributions noted above, participants in
the Providian Life and Health Insurance Retirement Account, formerly known as
the National Home Life Assurance Company Employees' Profit Sharing Plan, which
was merged into the Plan effective July 1, 1994, are entitled to receive a
contribution based upon a percentage of eligible compensation (1995: 4.0% and
1994: 4.5%). As a result of this provision, employer contributions of $1,405,584
and $1,624,455 were recorded in 1995 and 1994, respectively.
<PAGE>
NOTE B - DESCRIPTION OF THE PLAN (CONTINUED)
Plan assets are administered in eleven separate funds. Prior to September 26,
1994, Plan assets were administered in three separate funds. All employers'
contributions, except for participants who are at least 55 years of age who have
elected to make one-time irrevocable transfers to the Providian Stable Value
Fund(see below), are made to an employer contribution account in the Providian
Stock Fund, which consists almost entirely of Providian common stock. For
individuals making this irrevocable transfer to the Providian Stable Value Fund,
all future employer contributions are also invested in that fund. Contributions
from participants can be made to any of the following funds:
Providian Common Stock Fund: Invests primarily in shares of common stock of
Providian.
Providian Equity Index Fund: Invests primarily in futures, options,
short-term investments, and other securities with the objective
of closely matching the performance of the Standard & Poor's 500
Common Stock Index.
Providian Stable Value Fund: Invests primarily in a synthetic guaranteed
interest contract (GIC), the underlying assets of which consist of a portfolio
of intermediate-term bonds with an average credit quality of AA. The fund also
invests in intermediate and/or short-term floating rate GICs and a short-term
money market fund.
Merrill Lynch Global Allocation Fund: Invests in a portfolio of U.S. and
foreign equity, debt and money market securities.
Merrill Lynch Corporate Bond Fund - Investment Grade Portfolio: Invests in
long-term corporate bonds rated A or better by a nationally recognized
rating agency.
Merrill Lynch Basic Value Fund: Invests primarily in high-quality
common stocks that provide high current income and a low level of
volatility relative to the markets.
Merrill Lynch Asset Income Fund: Invests approximately 65% of the
funds in United States and foreign fixed-income instruments.
Merrill Lynch Asset Growth Fund: Invests a minimum of 65% in equity
instruments. The balance is invested in debt and money market
securities.
Fidelity Advisor Growth Fund: Invests primarily in common stocks and
securities convertible into common stocks inside the United States.
Delaware Group Trend Fund: Invests primarily in common stocks and
securities convertible into common stocks of emerging and other
growth-oriented companies.
Templeton Foreign Fund: Invests primarily in stocks and debt
instruments of companies and governments outside the United States.
Generally, all participants in the Plan maintain Providian Stock Fund accounts.
Upon reaching the age of 55, participants may make a one-time irrevocable
election to transfer their account balance from the Providian Stock Fund to the
Providian Stable Value Fund and invest their own contributions in the other
funds described above rather than in the Providian Stock Fund. A proportionate
share of the net increase or decrease resulting from investment income and net
appreciation or depreciation in investments in each fund is allocated to each
participant on the valuation date.
<PAGE>
NOTE B - DESCRIPTION OF THE PLAN (CONTINUED)
A participant may withdraw all or part of his or her after tax and/or employer
contribution account in cash once during any calendar year. A participant may
not withdraw any amounts contributed by an employer within the two year period
immediately preceding the date of withdrawal, unless the participant has at
least sixty months of participation in the Plan.
Within certain pre-defined criteria, Plan participants may borrow from $1,000 to
the lesser of $50,000 or one-half of the vested portion of the participant's
individual account from their respective pre-tax accounts. Loan repayment terms
cannot exceed five years. The fixed interest rate on a loan is the prime rate as
published in the Wall Street Journal on the last business day of the preceding
month plus 1%.
A participant or his or her beneficiary is entitled to receive the participant's
full interest in the Plan upon attainment of the earlier of the participant's
age sixty-five, death or medical disability. For any other type of termination,
the participant is entitled to receive the value of his or her contribution
account as of the valuation date coincident with or next following termination
of employment. In addition, the participant has a vested interest in his or her
employer contribution account determined on the basis of years of service with
the employer as follows:
Vested Percentage of
Employer
Years of Service Contribution Account
--------------------------- ------------------------------------
Less than 2 0%
2 but less than 3 15%
3 but less than 4 35%
4 but less than 5 65%
5 years or more 100%
At a minimum, the participant is entitled to receive his or her contributions to
the Plan, without interest.
The value of the nonvested portion of the employer contribution account,
forfeited by a participant who terminates from the Plan, is held until five
consecutive one-year breaks in service have expired or the participant receives
or is deemed to receive a lump sum distribution from the participant's
individual account. Any forfeitures attributable to the employer contribution
account shall be used first, to pay for any forfeitures which are to be restored
pursuant to a participant being reinstated into the Plan, and then to pay Plan
administrative expenses. Any remaining forfeitures will be used to reduce future
employer contributions.
Under the Tax Reform Act of 1986, the Plan is subject to a
nondiscrimination test which limits the contribution rate of certain highly
compensated employees. The Plan is operated in compliance with the
nondiscrimination limitations.
<PAGE>
NOTE B - DESCRIPTION OF THE PLAN (CONTINUED)
Although the employers intend to continue the Plan, they have the right to
terminate the Plan or to temporarily suspend or permanently discontinue
contributions at any time. In the event of termination or discontinuance of
contributions, all rights and interests of the participants shall become fully
vested and nonforfeitable. In no event will the assets of the Plan revert to the
employer or be used or applied for any purpose other than the exclusive benefit
of participants and their beneficiaries or costs of administration.
Effective January 1, 1994, employees of Academy Insurance were eligible to
participate in the Plan. Employer and employee contributions subsequent to
January 1, 1994 are included in the accompanying Statement of Changes in Net
Assets Available for Plan Benefits. On July 1, 1994, the existing assets and
participant accounts totaling $1,843,972 from the Academy Insurance Group
Retirement and Savings Plan (Academy Plan) were merged into the Plan.
Effective July 1, 1994, Providian Life and Health Insurance Retirement Account,
formerly known as the National Home Life Assurance Company Employees' Profit
Sharing Plan was merged into the Plan. Assets and participant accounts of the
merged plan were transferred to the Plan as of that date. The total amount
transferred from the National Home Plan was $37,173,272 on that date. Certain
provisions from the National Home Plan were retained subsequent to the merger
into the Plan. Reference should be made to the Plan document for a summary of
these provisions.
NOTE C - FEDERAL INCOME TAXES
Providian has obtained a determination letter dated February 10, 1987 from the
Internal Revenue Service finding that the Plan and its related trust are
qualified under Section 401(a) and 501(a), respectively, of the Internal Revenue
Code of 1954. During the period the Plan is so qualified, a participant will not
be subject to federal income taxes on the contributions of the participant's
employer, or on dividends, interest or profit from the sale of securities
received by the Trustee and credited to the participant's account, until such
account is distributed to the participant (or a designated beneficiary or legal
representative).
Effective January 1, 1990, the Plan was amended to include pre-tax
401(k) and loan features. A favorable determination letter has been
received by the Plan for these amendments.
<PAGE>
NOTE D - TRANSACTIONS WITH PARTIES-IN-INTEREST
Transactions with Providian and Commonwealth, both participating employers in
the Plan, and Merrill Lynch Trust Company and Liberty National Bank, Trustee and
former Trustee of the Plan, respectively, are summarized as follows:
1995 1994
----------------- ----------------
Providian common stock:
Shares purchased (1) 372,986 494,964
Cost of purchases $13,861,759 $15,885,264
Shares sold (1) 424,475 311,488
Proceeds from sales $15,768,228 $ 9,782,696
Shares held at December 31 2,418,874 2,490,971
Balance at December 31 $98,569,116 $76,908,742
Dividends $ 2,219,398 $ 1,916,294
Guaranteed interest contracts
with Commonwealth:
Deposits $33,874,512 $66,024,935
Withdrawals $37,933,179 $45,652,926
Balance at December 31 $64,679,453 $64,062,836
Interest $ 4,675,284 $ 4,016,848
Registered mutual funds with Merrill Lynch:
Cost of purchases $32,336,810 $38,137,599
Proceeds from sales $19,518,440 $15,014,725
Balance at December 31 $30,895,307 $23,005,382
Investment income $ 1,245,145 $ 444,275
Liberty Treasury Bill Index Account
with Liberty National Bank:
Cost of purchases - $18,123,101
Proceeds from sales - $32,226,691
Balance at December 31 - -
Interest - $ 246,711
(1) These shares were traded on a national securities exchange.
NOTE E - INVESTMENTS
The current value of individual Plan investments that represent 5% or more of
net assets available for plan benefits at December 31, 1995 and 1994 is as
follows:
1995 1994
------------------ ------------------
Providian common stock $98,569,116 $76,908,742
Commonwealth guaranteed
interest contract $21,136,689 $33,479,193
Commonwealth synthetic
guaranteed interest contract $43,542,764 $30,583,643
Temporary investments
- Merrill Lynch Treasury Fund $18,956,054 $13,068,873
<PAGE>
NOTE F - GUARANTEED INTEREST CONTRACTS
The Plan owns a guaranteed interest contract that was issued by Commonwealth.
The contract provides for the guarantee of principal plus an indexed rate of
return on the principal amount which is adjusted quarterly based on long-term
market interest rates. At December 31, 1995 and 1994, the contract value was
$21,136,689 and $33,479,193, respectively, which approximates fair value, as
reported to the Plan by Commonwealth. Contract value represents contributions
made under the contract, plus earnings, less Plan withdrawals and administrative
expenses. During 1995 and 1994, the average yield on the contract was 6.25% and
7.75%, respectively. At December 31, 1995 and 1994, the crediting interest rate
on the contract was 7.13% and 8.17%, respectively.
During 1994, the Plan acquired a synthetic interest contract issued by
Commonwealth. In connection with this contract, the Plan retains ownership of
assets placed in a trust while Commonwealth provides an insurance wrapper that
guarantees benefit responsiveness to plan participants at contract value. The
underlying assets of the contract primarily consist of U.S. Treasury Notes and
mortgage-backed securities guaranteed by the U.S. government. At December 31,
1995 and 1994, the contract value was $43,542,764 and $30,583,643, respectively,
which equals the fair value of the underlying assets (1995: $45,833,218 and
1994: $27,453,865) and of the insurance wrapper (1995: $(2,290,454) and 1994:
$3,129,778). During 1995 and the period that this contract was outstanding
during 1994, the average yield was 7.27% and 7.10%, respectively, while the
crediting interest rate was 7.35% and 7.286% at December 31, 1995 and 1994,
respectively.
NOTE G - FINANCIAL INSTRUMENTS
The Plan utilizes futures contracts with off-balance-sheet market risk in its
investing activities for the Providian Equity Index Fund. Futures are contracts
which call for the delayed delivery of securities in which the seller agrees to
deliver on a specified future date, a specified instrument, at a specified
price. Generally, futures contracts' margin requirements, equal to the change in
market value, are settled daily. These instruments are subject to market risk,
which is the possibility that future changes in market prices may make the
instruments less valuable. The Plan's investment of $800,000 in an United States
Treasury Bill has been pledged to meet the margin requirements for these open
futures contracts at December 31, 1995. The Plan had committed to purchase
equity indexes having contract values of $19,790,400 and $14,071,175 at December
31, 1995 and 1994, respectively. The contract amounts of these instruments
reflect the extent of involvement in futures contracts. The Plan had no
off-balance-sheet exposure to credit risk associated with futures contracts at
December 31, 1995 and 1994.
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
PROVIDIAN CORPORATION THRIFT SAVINGS PLAN
December 31, 1995
<CAPTION>
Description of Investment
Including Maturity Date,
Rate of Interest, Par, or
Maturity Value
Identity of Issue, Borrower, Lessor or Similar Current Value
Party Cost
- ---------------------------------------------------- ----------------------------------------------- -------------------
<S> <C> <C> <C>
Common stock -
Providian Corporation 2,418,874 shares
common stock* $ 60,803,895 $ 98,569,116
Synthetic guaranteed interest contract- Indexed rate of return,
Commonwealth Life Insurance adjusted quarterly
Company (Contract #ADA00110)*
Underlying assets
Insurance wrapper 43,542,764 45,833,218
0 (2,290,454)
Guaranteed interest contract- Commonwealth Life Indexed rate of return,
Insurance adjusted quarterly
Company (Contract #ADA00734FR)* 21,136,689 21,136,689
Registered mutual funds -
Merrill Lynch Global Allocation
Fund* 92,258 shares 1,207,786 1,280,546
Merrill Lynch Corporate Bond
Fund* 238,655 shares 2,658,735 2,825,679
Merrill Lynch Basic Value Fund* 85,642 shares 2,195,712 2,424,517
Merrill Lynch Asset Income Fund* 74,007 shares 747,777 785,950
Merrill Lynch Asset Growth Fund* 39,400 shares 380,198 386,121
Merrill Lynch Government Fund* 4,236,000 shares 4,236,440 4,236,440
Merrill Lynch Treasury Fund* 18,956,054 shares 18,956,054 18,956,054
Fidelity Advisor Growth Fund 165,629 shares 4,539,412 5,240,511
Delaware Group Trend Fund 93,014 shares 1,259,278 1,480,781
Templeton Foreign Fund 384,754 shares 3,646,867 3,532,045
-------------------- -------------------
Subtotal $165,311,607 $204,397,213
-------------------- -------------------
*Indicates party-in-interest to the Plan.
</TABLE>
<PAGE>
<TABLE>
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES (CONTINUED)
PROVIDIAN CORPORATION THRIFT SAVINGS PLAN
December 31, 1995
<CAPTION>
Description of Investment
Including Maturity Date,
Identity of Issue, Borrower, Lessor or Similar Rate of Interest, Par, or
Party Maturity Value Cost Current Value
- ---------------------------------------------------- ------------------------- -------------------- -------------------
<S> <C> <C> <C>
Subtotal from previous page
$165,311,607 $204,397,213
United States Treasury Bill $800,000 par value,
5.202 effective
rate, matures
3/21/96 789,596 791,432
Loans receivable from Principal balances from
participants $1,000 to $50,000,
bearing interest at the
prime rate plus 1%, due
within 5 years from date
of loan
5,420,225 5,420,225
================ ===================
$171,521,428 $210,608,870
================ ===================
</TABLE>
<PAGE>
<TABLE>
=============================================================================
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
=============================================================================
PROVIDIAN CORPORATION THRIFT SAVINGS PLAN
Year Ended December 31, 1995
Current Value
of Asset on
Cost Proceeds Transaction
Identity of Party Involved Description of Assets of Purchases from Sales Cost Date Net Gain
-------------------------- -------------------- ------------ ----------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Category (iii) - A series of securities transactions in excess of 5% of plan assets
Providian Corporation 372,986 shares of common $13,861,759 $13,861,759 $13,861,759
stock
Providian Corporation 424,475 shares of common $15,768,228 11,737,555 15,768,228 $4,030,673
stock
Commonwealth Life Insurance Guaranteed interest contract 33,874,512 33,874,512 33,874,512
Commonwealth Life Insurance Guaranteed interest contract 37,933,179 37,933,179 37,933,179 -
Merrill Lynch Merrill Lynch Government Fund 15,200,398 15,200,398 15,200,398
(15,200,398 shares)
Merrill Lynch Merrill Lynch Government Fund 10,957,668 10,957,668 10,957,668 -
(10,957,668 shares)
Merrill Lynch Merrill Lynch Treasury Fund 12,615,600 12,615,600 12,615,600
(12,615,600 shares)
There were no category (i), (ii), (iv) reportable transactions during 1995
</TABLE>
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration Statement No.
33-34655 on Form S-8 dated April 24, 1990, as amended by Post Effective
Amendment No.1 dated April 16, 1991, and in Registration Statement No. 33-47336
on Form S-8 dated April 21, 1992 (which also serves as Post Effective Amendment
No.2 to Registration Statement No. 33-34655), as amended by Post Effective
Amendment No. 2 dated July 18, 1994 pertaining to the Providian Corporation
Thrift Savings Plan of Providian Corporation and in the related Prospectus, of
our report dated May 27, 1996, with respect to the financial statements and
schedules of the Providian Corporation Thrift Savings Plan included in this
Annual Report (Form 11-K) for the year ended December 31, 1995.
/S/ ERNST & YOUNG LLP
Louisville, Kentucky
May 27, 1996
