Providian Posts $395.3-Million Loss in 4th Quarter
Credit card issuer Providian Financial Corp. on Thursday reported a $395.3-million loss in the fourth quarter, including almost $1 billion in charges and additional reserves as it was hit by rising loan defaults.
The loss for Providian, which lends to people with spotty credit records, amounted to $1.39 a share after additions to loss reserves and charges. That contrasted with a profit of $225.1 million, or 76 cents, in the year-ago quarter.
The company also said banking regulators have accepted its capital plan, which includes the sale of proceeds from $8.2 billion in credit card loans to J.P. Morgan Chase & Co.
Providian had postponed releasing results hours before they originally were due on Jan. 31, saying it was working out the final components of the plan.
The company, which in November was prohibited by regulators from taking on new customers with short or poor credit histories, has been cutting jobs and looking to unload parts of its card portfolio in an effort to boost results.
“We’ve gotten our arms around the loss situation,” Chief Executive Joseph Saunders told investors on a conference call. “I believe that we have turned the corner and the company is on an appropriate trajectory to an acceptable earnings level.”
Providian’s latest results included the addition of $252 million for loan-loss reserves and several other charges.
“They threw everything into it,” said Matthew Park, an analyst at Thomas Weisel Partners. “They put aside a lot of money to reserves, in the anticipation of further deterioration in credit quality. But I think it was encouraging regulators approved this set of charges and their plan to grow.”
Wall Street had expected Providian to earn between a profit of 10 cents a share and a loss of 51 cents a share, with a mean estimated loss of 6 cents, according to Thomson Financial/First Call.
Providian shares closed off 33 cents at $3.46 on the New York Stock Exchange, before the results were released. Providian stock was the worst performer in the Standard & Poor’s 500 index last year, falling 94%.
At the end of 2000, Providian was worth $16.3 billion on the stock market. It has a market value of $985 million now.
Other earnings from California companies, excluding one-time items:
* Engineering and construction firm Fluor Corp. reported fourth-quarter net income of $28.5 million, or 36 cents a share, including a $10.2-million charge stemming from the retirement of Chairman and Chief Executive Philip Carroll and Vice Chairman Jim Stein.
The company’s earnings from continued operations were $31.4 million, or 39 cents a share, on revenue of $2.6 billion. Analysts had expected 40 cents on average, according to Thomson Financial/First Call.
The Aliso Viejo company, which changed its fiscal year end to Dec. 31 from Oct. 31, declined to provide comparable year-ago results.
