Troubled credit-card issuer

Providian

(PVN)

posted lower third-quarter earnings that nevertheless appeared to easily top analysts' forecasts despite a host of charges related to bad loans.

The San Francisco company said it earned $42.1 million, or 15 cents a share, in the quarter, down from $57.2 million, or 20 cents a share, last year. The latest quarter included a $30 million one-time tax benefit as well as $43.2 million of pretax expenses related to asset quality weakening in its securitizations and a higher allowance for uncollectable finance charges.

Another $10.6 million of pretax expense reflected losses related to lower recovery of charged-off loans at First Select Corp. and severance expenses, partly offset by a gain from an earlier-than-expected transfer of some servicing rights and the sale of investment securities.

Analysts polled by First Call had been expecting the company to earn 4 cents a share in the quarter. The company posted total revenue, comprising net interest income plus non-interest income, of $1.22 billion, down from $1.68 billion a year ago and below the First Call consensus of $1.31 billion.

Providian has spent the year scaling back both its loan portfolio and the number of people it employs after a harrowing foray into subprime lending battered its stock at the end of 2001. The company said it ended the third quarter with $19.4 billion in total managed credit card loans and 12.7 million accounts, compared with $19.6 billion in loans and 12.9 million accounts at the end of the second quarter of 2002. It cut 1,000 people from its payroll over the same period.

As for credit quality, the company said its managed net credit loss rate was 16.71% in the quarter, down from 17.53% in the second quarter. Its managed 30-plus-day delinquency rate at the end of the third quarter was 11.23%, up from 10.16% at the end of the second quarter.

The company continues to expect the dollar amount of managed net credit losses to show an increase in the fourth quarter 2002, but it expects the full-year amount to be modestly below its previous expectation of $3.6 billion.