Pretax earnings at Providian Bancorp equaled 40% of the operating profits last year of its parent company, the Louisville-based insurance holding company Providian Corp.
Providian Bancorp's pretax earnings rose 27.4% last year, to $150 million. It was the eighth consecutive year in which the San Francisco- based consumer bank, an innovator in credit card micromarketing noted for superior credit quality, boosted income by 20% or more.
The bank's fourth-quarter operating earnings increased by 30.7% to $41.3 million.
Major factors in the improvements were increased fee income, growth in total managed loans, and lower overall credit losses, the company said.
Providian Bancorp, known as First Deposit Corp. before a recent name change, was the 22d-largest credit card bank at yearend with $3.1 billion of balances and 2.5 million cards outstanding, according to The Nilson Report.
The bank's total managed loans on Dec. 31, including securitized loans that it services, were $4.7 billion, up 19.4% from yearend 1993. The company cited solid growth in its Visa Gold and Select Equity home loan portfolios.
Providian Corp.'s total assets are $23.6 billion.
Annualized net credit losses on the unsecured loan portfolio were 4.7% in 1994, down from 5.2% the previous year.
Delinquent loan balances for the unsecured portfolios were 3% at yearend, essentially even with the 2.9% of a year earlier.
Providian Corp.'s full-year operating earnings, consolidating its banking, insurance, and asset management activities, were up about 10% to $377.2 million. The fourth-quarter result was up 4% to $96.1 million.
Net income for the fourth quarter, including realized investment gains and losses and related amortization, was $69.1 million, or 70 cents a share, down from $91.5 million, or 89 cents, a year earlier. Net income for the full year was down 7% to $300.9 million; the per-share net fell 3%, to $3.02.
The full year's net income included $100.3 million in pretax realized losses, comprising $26.9 million in investment and securities losses, a $21 million provision for mortgage loan losses, and a first-quarter $52.4 million write-off of an investment in Granite Partners.
Late in 1994, Shailesh Mehta, who engineered the growth and stellar performance of the banking unit, was appointed president, chief operating officer, and a director of the parent company. He oversees the bank, Providian Agency Group, and Providian Direct Insurance.
The company's other business unit, Providian Capital Management, reports to chairman and chief executive officer Irving W. Bailey 2d.
Mr. Bailey called 1994 "a challenging (year) for Providian and the entire financial services industry." He said Providian's business mix and ability to fine-tune its strategies allowed it to continue boosting earnings in an increasing interest-rate environment.
Mr. Bailey made mention of Mr. Mehta's status in his earnings summary, saying, "This appointment recognizes the major contributions Shailesh Mehta has made to the growth and profitability of Providian's businesses."
