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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Thomas M. who wrote (118460)	8/27/2001 10:01:24 PM
From: Mike M2	Read Replies (2) \| Respond to of 436258

Thomas, major ho ho ho prudentbear.com mike

To: Thomas M. who wrote (118460)	8/27/2001 10:14:15 PM
From: Cynic 2005	Respond to of 436258

PVN is at the center of a controversy reg this paragraph in their 10Q. For the three months ended June 30, 2001, managed net interest income increased 40% to $962.2 million, compared to $687.8 million for the second quarter of 2000. The Company"s managed net interest margin on loans increased to 13.13% for the second quarter of 2001, compared to 12.05% for the same period in 2000. For the second quarter of 2001, the managed net credit loss rate was 10.29%, compared to 7.42% for the second quarter of 2000 and 9.34% for the first quarter of 2001. This increase was attributable primarily to the seasoning of the managed loan portfolio and a rise in year-to-date consumer bankruptcies. The 30+ day managed delinquency rate as of June 30, 2001 increased to 8.04% from 7.64% as of March 31, 2001. The contribution to managed revenue from non-interest income for the second quarter of 2001 increased 18% over the same period in 2000, excluding the one-time gain, to $802.4 million, due to increased revenue from credit product fees and servicing and securitization income. Year over year, managed non-interest expense increased $111.9 million to $621.6 million in the second quarter of 2001, compared to $509.7 million in 2000, excluding one-time adjustments. The increase in non-interest expense reflects the Company"s continued investments in marketing initiatives and its customer service and collections infrastructure For once, I got this scoop from an "analyst" call. WHere is this world headed to!!! (I guess they are trying to rebuild credibility) www2.marketwatch.com -------------------------- Providian's bad-loan policy change raises questions 8/27/2001 3:54:00 PM SAN FRANCISCO, Aug 27 (Reuters) - Analysts have raised sharp questions about the manner in which Providian Financial Corp. (PVN) revealed it had changed its policy on how it accounts for bad loans, but the credit-card issuer defended its actions on Monday and denied it was an accounting trick. Credit Suisse First Boston and Goldman Sachs analysts cut their earnings outlooks and Providian shares have tumbled nearly 9 percent since the credit-card issuer disclosed in a regulatory filing two weeks ago that is now taking up to 30 days to write off accounts when customers notify them that they will not pay because of bankruptcy. But analysts were particularly miffed because the company did not declare the change upfront during its earnings conference call last month, given the concern over credit losses amid a slowing economy, said Joel Houck, a senior analyst with A.G. Edwards & Sons Inc. As a result, investors now have the perception that the move is tantamount to an accounting trick to hit earnings numbers, he said. However, Providian Chief Financial Officer Jim Rowe said the change was adopted to make processing claims more efficient and the company did not mention it in the earnings conference call because it did not affect earnings. "It's certainly not an accounting trick by any means," Rowe said in an interview. "It's a legitimate change that we believe to be earnings neutral." The change pushed some bad loans into the third quarter, resulting in a lower second-quarter loss rate, or the percentage of the lending portfolio that Providian does not expect to be repaid, analysts said. If the company had continued its policy of writing off the loans immediately, they would have been recorded in the second quarter. "It's simply a credibility issue," said Houck. "There are perfectly legitimate reasons to do it, but given that there has been so much focus about loss rates and where they're headed for this company, and to disclose it in a regulatory filing and not during the regular conference call, is suspect. And they got beaten up Friday for it." The company's shares have dropped $4.16, or more than 9 percent, to $41.47 since the company announced the change in its 10-Q filing with the Securities and Exchange Commission on August 14. Providian shares rose 59 cents, or 1.49 percent, to $41.47 on the New York Stock Exchange on Monday afternoon. The change in the loan policy lowered the company's loss rate to 10.29 percent in the second quarter, said Moshe Orenbuch, analyst with Credit Suisse First Boston. Without the change, the loss rate would have been as high as 10.5 percent to 10.7 percent, he said. "I felt like if it was material it should have been mentioned in the conference call, and if it wasn't material, it shouldn't have been mentioned as part of the 10-Q disclosure," said Orenbuch. Investors have been closely monitoring Providian's activities since July, when the company reported bad loans had spiked. The company, a major lender to people with patchy and thin credit histories, has recently begun pitching its cards more aggressively to customers with cleaner histories. REUTERS Rtr 15:54 08-27-01