After delivering disastrous third-quarter results and watching his companys stock price plummet, Providian Financial Corp. founder Shailesh J. Mehta, once hailed as a card-industry visionary, said Thursday he would step aside and cede control to J. David Grissom, a board member.
The announcement, made after the markets close, coincided with an earnings release that said the monolines net earnings fell 71% from a year earlier, and that, as part of a five-step action plan, it would curtail lending to subprime customers and trim expenses.
Mr. Mehta, who learned the card business at Citibank and built his own company into the fifth-largest issuer of Visa and MasterCard cards, said Mr. Grissom would take over as chairman. Mr. Mehta will continue as president and chief executive while the board searches for a successor.
Calling himself frustrated, Mr. Mehta said in a conference call that the move was his own decision. We have done many remarkable things together [but] we have not delivered earnings or credit quality as projected. In a prior statement, he said: Providian remains a strong and vibrant company and would strive to regain its recent successful growth performance.
Mr. Grissom, a longtime Providian board member, is the chairman of Mayfair Capital Inc., a private investment firm, and Glenview Trust Co., a private trust company, both headquartered in Louisville. Earlier, he was chairman and CEO of Citizens Fidelity Bank and Trust Co. and vice chairman of PNC Financial Corp.
Providian, which had lowered its third-quarter earnings guidance twice, said profits fell to $57.2 million, or 20 cents per share, from $200.7 million, or 68 cents per share, a year earlier. Its stock fell 3.5% in Thursdays trading. Its shares fell 65% in the first nine months of the year.
