SECURITIES AND EXCHANGE COMMISSION
                              Washington D.C. 20549
                               
                                    FORM 10-Q

(Mark  One) 
[ X ]  QUARTERLY  REPORT  PURSUANT  TO  SECTION  13 OR  15(D) OF THE
       SECURITIES EXCHANGE ACT OF 1934 
       For the quarterly period ended June 30, 1997

                                       OR

[ ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES 
       EXCHANGE ACT OF 1934
       For the transition period from ____________ to ______________.


                                     1-12897
                                     -------
                            (Commission File Number)

                         PROVIDIAN FINANCIAL CORPORATION
                         -------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

          Delaware                                                94-2933952
-------------------------------                              -------------------
(State or other Jurisdiction of                               (I.R.S. Employer
Incorporation or Organization)                               Identification No.)

         201 Mission Street, San Francisco, California  94105
         -------------------------------------------------------
          (Address of principal executive offices)    (Zip Code)


                                 (415) 543-0404
                                 --------------
              (Registrant's Telephone Number, Including Area Code)

                                 Not Applicable
   --------------------------------------------------------------------------
   (Former name, former address and former fiscal year, if changed since last
    report)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required  to be filed by  Section  13 or 15(d) of the  Securities  Exchange  Act
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.   Yes   X    No 
                                         -----     -----

     As of July 31,  1997,  there  were  95,377,167  shares of the  registrant's
Common Stock, par value $0.01 per share, outstanding.


<PAGE>


                         PROVIDIAN FINANCIAL CORPORATION
                                    FORM 10-Q

                                      INDEX

                                  June 30, 1997


PART I.   FINANCIAL INFORMATION                                             

          Item 1.  Financial  Statements (unaudited):
                      Condensed Consolidated Statements of Financial
                          Condition  
                      Condensed Consolidated Statements of Income  
                      Condensed Consolidated Statements of Changes in
                          Shareholders' Equity  
                      Condensed Consolidated Statements of Cash Flows  
                      Notes to Condensed Consolidated Financial
                          Statements 

          Item 2.  Management's Discussion and Analysis of Financial
                      Condition and Results of Operations 

PART II.  OTHER INFORMATION

          Item 1.  Legal Proceedings

          Item 4.  Submission of Matters to a Vote of Security Holders

          Item 5.  Other Information 

          Item 6.  Exhibits and Reports on Form 8-K  

Signatures  



<PAGE>


PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements.

PROVIDIAN FINANCIAL CORPORATION
Condensed Consolidated Statements of Financial Condition
(Dollars in thousands, except per share data) (unaudited)

<TABLE>
<CAPTION>

                                                                              June 30             December 31
                                                                                1997                   1996
                                                                          ------------------     ----------------
<S>                                                                            <C>                     <C>  
ASSETS:
Cash and cash equivalents                                                 $      189,616         $      82,946
Federal funds sold                                                               279,800               172,350
Investment securities at cost (which approximates market value)                  154,613                 7,173
Loans held for sale                                                              148,333               739,706
Loans receivable, less allowance for possible credit losses of $129,743
   in 1997 and $114,540 in 1996                                                2,586,706             2,835,388
Due from securitizations                                                         426,852               252,899
Interest receivable                                                               66,056                56,864
Premises and equipment, less accumulated
   depreciation and amortization                                                  55,103                49,870
Other assets                                                                     145,530               154,546
                                                                          ------------------     ----------------

        Total assets                                                      $    4,052,609         $   4,351,742
                                                                          ==================     ================

LIABILITIES:
Deposits                                                                  $    2,842,822         $   3,390,112
Term federal funds purchased                                                     179,000                51,000
Notes payable to banks                                                           148,000               115,000
Note payable to affiliates                                                          -                   42,500
Long term notes payable                                                             -                   50,000
Accrued expenses and other liabilities                                           208,187               219,986
                                                                          ------------------     -----------------
        Total liabilities                                                      3,378,009             3,868,598

Company obligated mandatorily redeemable capital securities of
 subsidiary trust holding solely junior subordinated deferrable
 interest debentures of the Company (Capital Securities)                         160,000                  -

SHAREHOLDERS' EQUITY:

Preferred Stock
  1996- 7.25% Cumulative Preferred Stock,
  nonparticipating, nonvoting, par value $1.00 per share--authorized
  63,269 shares, issued and outstanding 63,269 shares                               -                      63
Common Stock
  1997- par value $.01 per share, authorized 400,000,000 shares,
  issued and outstanding 95,425,320 shares as of June 30, 1997;
  1996- par value $1.00 per share, authorized 5,000 shares,
  issued and outstanding 5,000 shares                                                954                    5
Additional paid-in capital                                                         6,845               63,706
Retained earnings                                                                506,801              419,370
                                                                          ------------------     -----------------
        Total shareholders' equity                                               514,600              483,144
                                                                          ------------------     -----------------
        Total liabilities and shareholders' equity                        $    4,052,609         $  4,351,742
                                                                          ==================     =================

See notes to condensed consolidated financial statements.

</TABLE>

<PAGE>

PROVIDIAN FINANCIAL CORPORATION
Condensed Consolidated Statements of Income
(Dollars in thousands, except per share data) (unaudited)

<TABLE>
<CAPTION>


                                            Three Months Ended                 Six Months Ended
                                                 June 30                            June 30                 
                                        ---------------------------      ---------------------------   
                                           1997            1996             1997            1996          
                                        ------------   ------------      ------------   ------------      
<S>                                        <C>             <C>             <C>             <C>          
Interest income:                                                                                                          
 Loans                                  $ 132,216      $ 138,423         $ 278,541      $ 271,534       
 Investment securities                      7,483          2,893            13,329          5,476       
                                        ------------   -------------     ------------   ------------  
  Total Interest Income                   139,699        141,316           291,870        277,010       

Interest expense:
 Deposits                                  37,955         35,086            81,967         66,102        
 Borrowings                                 6,366         14,421            12,452         28,528        
                                        ------------   -------------     ------------   ------------   
  Total Interest Expense                   44,321         49,507            94,419         94,630       

    Net Interest Income                    95,378         91,809           197,451        182,380       

Provision for possible credit losses       38,950         23,831            72,752         52,182      
                                        ------------   -------------     ------------   ------------ 
                                                                                                         
    Net Interest Income After Provision
    for Possible Credit Losses             56,428         67,978           124,699        130,198      

Other income:
    Loan servicing income                  90,478         57,188           184,826        126,632
    Credit product fee income              44,242         29,224            82,752         52,851
    Other                                     362          6,369               501          6,523
                                        ------------   -------------     ------------   ------------
                                          135,082         92,781           268,079        186,006
Other expenses:
    Salaries and employee benefits         37,814         34,612            88,438         68,005
    Solicitation                           39,890         26,445            68,013         59,856
    Occupancy, furniture and equipment      9,554          5,994            17,799         11,131
    Data processing and communication      12,053          8,766            23,786         16,543
    Other                                  19,817         22,248            53,879         41,147
                                        ------------    -------------    ------------   ------------
                                          119,128         98,065           251,915        196,682
                                        ------------    -------------    ------------   ------------

            Income Before Income Taxes     72,382         62,694           140,863        119,522

Income tax expense                         26,658         23,810            51,977         45,230
                                        ------------    ------------     ------------   ------------
            Net Income                  $  45,724       $ 38,884         $  88,886      $  74,292
                                        ============    ============     ============   ============
Earnings per share                           N/A           N/A               N/A            N/A
                                        ============    ============     ============   ============

Weighted average common and common
  equivalent shares outstanding              N/A           N/A               N/A            N/A
                                        ============    ============     ============   ============


See notes to condensed consolidated financial statements.


</TABLE>

<PAGE>

PROVIDIAN FINANCIAL CORPORATION
Condensed Consolidated Statements of Changes in Shareholders' Equity
(Dollars in thousands, except share data) (unaudited)


<TABLE>
<CAPTION>

               
                                        Special          7.25% Cumulative                     Additional                  Total
                                     Preferred Stock     Preferred Stock      Common Stock    Paid - In   Retained     Shareholders'
                                     ----------------   ------------------   ---------------
                                     Shares    Amount    Shares    Amount    Shares   Amount   Capital    Earnings        Equity
                                     ------    ------   -------    -------   ------   ------  ----------  --------     -------------
<S>                                    <C>      <C>        <C>      <C>       <C>      <C>       <C>       <C>            <C>

Balance at December 31, 1995          1,290    $1,290       63     $   63         5   $    5  $  63,706   $284,191     $  349,255
Net Income                                                                                                  74,292         74,292
Cash dividend on preferred stock                                                                            (2,294)        (2,294)
                                      =====    ======    ======    ======    ======   ======  ==========  =========    ===========
Balance at June 30, 1996              1,290    $1,290       63     $   63         5   $    5  $  63,706   $356,189     $  421,253
                                      =====    ======    ======    ======    ======   ======  ==========  =========    ===========

Balance at December 31, 1996            -      $ -          63     $   63         5   $    5  $  63,706   $419,370     $  483,144
Net Income                                                                                                  88,886         88,886
Cash dividend on preferred stock                                                                            (1,006)        (1,006)
Redemption of preferred stock                              (63)      (63)                       (63,207)                  (63,270)
Net issuance of shares pursuant
 to the Distribution Agreement                                               95,248      948       (499)      (449)          -
Reimbursement relating to the
 conversion of stock options                                                                      6,846                     6,846
Issuance of restricted and
 unrestricted stock                                                             173        1      5,115                     5,116
Deferred compensation related to
 grant of restricted and unrestricted
 stock                                                                                           (5,116)                   (5,116)
                                      =====    ======    ======    ======    ======   ======   =========  =========   ============
Balance at June 30, 1997                -      $ -         -       $ -       95,426   $  954   $  6,845   $506,801     $  514,600
                                      =====    ======    ======    ======    ======   ======   =========  =========   ============ 

See notes to condensed consolidated financial statements.

</TABLE>


<PAGE>

PROVIDIAN FINANCIAL CORPORATION
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands) (unaudited )

<TABLE>
<CAPTION>


                                                                                                 Six Months Ended
                                                                                                     June 30
                                                                                      -------------------------------------
                                                                                          1997                   1996
                                                                                      -----------------     ---------------
<S>                                                                                      <C>                     <C>
OPERATING ACTIVITIES:
  Net Income                                                                          $      88,886         $       74,292
  Adjustments to reconcile net income to net cash provided by operating activities:
    Provision for possible credit losses                                                     72,752                 52,182
    Depreciation and leasehold amortization                                                   7,189                  4,600
    Amortization of net loan acquisition costs                                               19,507                 12,022
    Decrease in deferred income tax benefit                                                  18,353                  2,428
    (Increase) decrease in interest receivable                                               (9,192)                    32
    Change in other operating activities                                                    (90,778)               (50,394)
                                                                                      -----------------     ---------------
              Net Cash Provided by Operating  Activities                                    106,717                 95,162

INVESTING ACTIVITIES:
  Adjustments to reconcile net income to net cash used by investing activities:
    Net increase in money market instruments                                                 (1,050)                  -
    Net issuance and repayment of receivables                                              (624,557)            (1,569,819)
    Net proceeds from sales of receivables                                                1,391,618              1,420,000
    Increase in due from securitizations                                                   (123,515)               (30,371)
    Purchases of investment securities                                                     (366,050)                (4,077)
    Proceeds from sales/maturities of investment securities                                 219,660                     90
    Increase in federal funds sold                                                         (107,450)               (23,600)
    Net purchase of premises and equipment                                                  (12,483)               (11,255)
                                                                                      -----------------     ---------------
              Net Cash Provided (Used) by Investing Activities                              376,173               (219,032)

FINANCING ACTIVITIES:
  Adjustments to reconcile net income to net cash provided by financing activities:
    Net (decrease) increase in deposits                                                    (547,290)               144,861
    Increase in net borrowings under line of credit agreements                               33,000                345,000
    Decrease in note payable to affiliates                                                  (42,500)               (45,000)
    Net decrease in other short-term borrowings                                                -                  (112,880)
    Proceeds from issuance of term federal funds                                            244,000                   -
    Repayment of term federal funds                                                        (116,000)              (270,500)
    (Decrease) increase in long-term borrowing                                              (50,000)                50,000
    Redemption of preferred stock                                                           (63,270)                  -
    Reimbursement relating to conversion of stock options                                     6,846                   -
    Preferred stock dividend paid to shareholder                                             (1,006)                (2,294)
    Proceeds from the issuance of trust capital securities                                  160,000                   -
                                                                                      -----------------     ---------------
              Net Cash Provided (Used) by Financing Activities                             (376,220)               109,187
                                                                                      -----------------     ---------------

              Net Increase (Decrease) in Cash and Cash Equivalents                          106,670                (14,683)

    Cash and Cash Equivalents at beginning of year                                           82,946                104,083
                                                                                      -----------------     ---------------
    Cash and Cash Equivalents at End of Period                                        $     189,616         $       89,400
                                                                                      =================     ===============


See notes to condensed consolidated financial statements.

</TABLE>

<PAGE>

PROVIDIAN FINANCIAL CORPORATION
Notes to Condensed Consolidated Financial Statements
June 30, 1997 (unaudited)

Note A - Basis of Presentation

     The condensed  consolidated  financial  statements  include the accounts of
Providian Financial Corporation and its wholly owned subsidiaries  (collectively
referred  to as the  "Company").  The  Company's  subsidiaries  offer a range of
consumer lending products, deposit products and fee-based products and services.
The principal  operating  subsidiaries of the Company are First Deposit National
Bank,  Providian  National Bank and Providian Bank (formerly  known as Providian
Credit  Services,  Inc.),  all of which are financial  institutions  principally
engaged in consumer lending activities. Providian Financial Corporation also has
a subsidiary,  Providian Bancorp  Services,  which provides  administrative  and
customer services to its consumer lending affiliates.

     Providian Bancorp, Inc. changed its name to Providian Financial Corporation
effective May 30, 1997.

     The accompanying  unaudited condensed  consolidated financial statements of
the Company have been prepared in accordance with generally accepted  accounting
principles for interim  financial  information and with the instructions to Form
10-Q and Article 10 of Regulation S-X.  Accordingly,  they do not include all of
the  information  and  footnotes  required  by  generally  accepted   accounting
principles for complete  consolidated  financial  statements.  In the opinion of
management,  all adjustments  considered  necessary for a fair presentation have
been  included.  The  preparation  of financial  statements in  conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.  Operating
results for the six months ended June 30, 1997 are not necessarily indicative of
the results for the year ended  December  31, 1997.  The notes to the  financial
statements contained in the Company's  registration  statement on Form 10 (filed
with the Securities and Exchange Commission on April 17, 1997) should be read in
conjunction  with  these  consolidated  financial  statements.  All  significant
intercompany  balances and  transactions  have been  eliminated.  Certain  prior
period amounts have been reclassified to conform to the 1997 presentation.

Note B - Significant Accounting Policies

     Earnings  per Common  Share:  Historical  earnings  per share have not been
presented  because prior to June 10, 1997 all of the Company's  shares of common
stock  were  held  by  its  former  parent,  Providian  Corporation,   and  such
information would not be meaningful.  Pro forma earnings per share for the three
and six month  periods  ended June 30,  1997 and 1996 are listed  below and have
been  computed by dividing net income or pro forma net income for those  periods
by the weighted  average number of common shares  outstanding for the applicable
period.  In determining the pro forma number of common shares  outstanding prior
to the spinoff  from  Providian  Corporation,  the number of shares of Providian
Corporation common stock was used, since  shareholders of Providian  Corporation
received  one share of  Providian  Financial  Corporation  common stock for each
share of  Providian  Corporation  common  stock held on the record  date for the
spinoff.  In addition,  the effects of a February 1997  transaction in which the
Company issued  mandatorily  redeemable capital securities and used the proceeds
to repay  borrowings  under notes payable to affiliates and to redeem  preferred
stock has been  included in the  calculation  of pro forma  earnings  per common
share.

(Dollar amounts in thousands,                         For the three months ended
 except per share data)                                         June 30
                                                      --------------------------
                                                          1997           1996
                                                      -----------     ----------
Net Income (1)                                        $    45,724
Pro Forma Net Income                                                  $   37,100
Pro Forma weighted average number of shares outstanding    94,991         93,489
Pro forma earnings per share                                $0.48          $0.40

(Dollar amounts in thousands,                         For the six months ended
 except per share data)                                         June 30
                                                      --------------------------
                                                          1997           1996
                                                      -----------     ----------
Net Income (1)                                        $    88,886
Pro Forma Net Income                                                  $   70,722
Pro Forma weighted average number of shares outstanding    94,580         93,689
Pro forma earnings per share                                $0.94          $0.76

(1) Impact of pro forma adjustments not considered material.

     In February 1997, the Financial  Accounting Standards Board issued SFAS No.
128,  "Earnings per Share" ("SFAS No. 128"),  which establishes new computation,
presentation  and  disclosure  guidance  for  earnings  per share.  SFAS No. 128
replaces  primary  and  fully  diluted  earnings  per  share,  under  Accounting
Principles  Board  Opinion No. 15,  "Earnings per Share," with basic and diluted
earnings per share, respectively.  The Company will be required to adopt the new
SFAS No.  128  standards  in the fourth  quarter  of 1997 and to  restate  prior
periods for comparative  purposes.  The adoption of SFAS No. 128 is not expected
to have a material effect on the Company's earnings per share.

Note C - Stock Option, Stock Purchase and Stock Ownership Plans

     In June 1997, the Company adopted the Providian Financial  Corporation 1997
Stock Option Plan (the "Option Plan") which  authorizes  grants of incentive and
nonqualified   stock  options  to  officers,   key  employees  and  non-employee
Directors.  All stock  options  granted  under the Option  Plan have an exercise
price equal to the market value of the Company's common stock and a maximum term
of ten years.  In connection  with the spinoff from Providian  Corporation,  the
Company  converted  stock options held by employees and certain  Directors  into
1,937,524  Providian Financial  Corporation stock options ("Rollover  Options").
The conversion  maintained the converted  options'  vesting  provisions,  option
periods and ratio of  exercise  price per option to market  value per share.  No
additional  compensation  expense was  recorded as a result of the stock  option
conversions.   Additionally,   in  June  1997,  the  Company  issued   3,238,598
nonqualified stock options to employees and 70,000 nonqualified stock options to
non-employee Directors.

     The Option Plan  permits the  issuance of a total of  10,000,000  shares of
common stock in addition to the shares issuable as a result of Rollover Options,
resulting in a maximum  number of 11,937,524  shares of common stock issuable in
connection with the exercise of stock options.  As of June 30, 1997, the number
of common shares available for future grants under the Option Plan was 6,782,144
shares.  Activity  under the Option Plan during the quarter  ended June 30, 1997
was as follows:

<TABLE>
<CAPTION>
                                                                 Number of
                           Number of         Option Price          Shares
                            Shares            per Share          Exercisable
                           ---------         -------------       -----------
<S>                          <C>                <C>                <C>   
Outstanding:
  June 10, 1997
  Rollover Options         1,937,524         $ 11.12-23.33       1,074,182
  Granted                  3,308,598         $ 32.11                  -
  Exercised                   -                   -                   -
  Forfeitures                 90,742         $ 19.64-32.11            -
                           ---------         -------------       -----------
Outstanding at
  June 30, 1997            5,155,380         $ 11.12-32.11       1,074,182
                           =========         =============       ===========
</TABLE>

     In June 1997, the Company adopted the Providian Financial Corporation Stock
Ownership  Plan (the "Stock  Ownership  Plan") which provides for three forms of
awards to key officers,  employees and Directors:  nonrestricted stock, matching
restricted  stock and  discretionary  restricted  stock.  A maximum of 4,000,000
shares of common  stock are  permitted  to be issued  under the Stock  Ownership
Plan.  Restricted  stock is subject to  forfeiture  during the  vesting  period.
Matching restricted stock is granted in conjunction with nonrestricted stock and
may be  forfeited  in the event the  nonrestricted  stock is not  maintained  on
deposit with the Company's transfer agent. On June 11, 1997, the Company granted
to officers  180,000 shares of restricted stock which vest over a period of five
years.  Also,  on June 11, 1997,  certain  Directors  elected to take a total of
9,020  shares  of common  stock in lieu of cash  compensation  related  to their
annual  retainers.  Also, at that time, a related grant was made to Directors of
3,691 matching restricted shares which vest one-half in three years and fully in
six years, if vesting  requirements  are met. The market value of  approximately
$5.1 million of restricted  stock was recorded as deferred  compensation  at the
time of grant and will be amortized over the vesting period.

Note D - Asset Securitization

     On January 1, 1997, the Company adopted  Statement of Financial  Accounting
Standards No. 125,  "Accounting for Transfers and Servicing of Financial  Assets
and  Extinguishments of Liabilities"  ("SFAS No. 125"),  effective for financial
asset sales  occurring  after  December 31, 1996.  Under SFAS No. 125, gains are
recognized  at the  time  of  initial  sale  and  each  subsequent  sale of loan
receivables in a securitization.  As a result,  the Company now recognizes gains
from such loan sales as "loan  servicing  income" on its statement of income and
the related  asset as "due from  securitizations"  on its statement of financial
condition.  As a result of the adoption of SFAS No. 125, loan  servicing  income
increased  $16.2  million  and $50.4  million  during the three and six  months,
respectively, ended June 30, 1997. This increase in loan servicing income is not
expected to be representative  of future periods.  Any future gains that will be
recognized by the Company in  accordance  with SFAS No. 125 will be dependent on
the timing,  performance and amount of future  securitizations.  The increase in
loan servicing  income is  non-recurring  because,  for the first nine months of
1997,  the Company will  recognize  both excess  servicing  income  generated by
securitized  balances existing at December 31, 1996 and gains on additional loan
sales made during that period. In accordance with SFAS No. 125, prior years have
not been restated.


Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations.

Introduction

     Providian Financial Corporation and its subsidiaries (collectively referred
to as the "Company")  offer a range of consumer loan products,  deposit products
and fee-based  products and services to customers  throughout the United States.
The Company utilizes primarily direct mail and telemarketing account origination
channels  and the Company is one of the  fifteen  largest  issuers of  unsecured
credit cards in the United  States with over $7.6  billion of managed  unsecured
credit card loans  outstanding  as of June 30,  1997.  The  Company  also offers
secured  credit card loans and home equity  loans.  As of June 30, 1997  secured
credit card loans and managed  home equity loans  outstanding  were $608 million
and $982 million,  respectively. The primary factors affecting the profitability
of the Company's  consumer credit  products are the number of customer  accounts
and outstanding loan balances, net interest margins,  credit usage, level of fee
income, credit quality, and the level of solicitation,  marketing, servicing and
other administrative expenses.

Forward-Looking Statements     

     Certain  statements  contained herein include  forward-looking  information
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended,  and are subject
to the "safe harbor" created by those sections. These forward-looking statements
are based on management's  beliefs and assumptions and on information  currently
available  to  management.   Forward-looking   statements  include   information
concerning  possible or future  results of  operations  of  Providian  Financial
Corporation.   Forward-looking   statements   are  not   guarantees   of  future
performance.    Such   forward-looking   statements   involve   certain   risks,
uncertainties  and  assumptions  that  could  cause  actual  results  to  differ
materially  from  those  in  the  forward-looking   statements.  For  additional
information  concerning such risks,  uncertainties,  and assumptions,  see "Risk
Factors" in the registration  statement on Form 10 filed by the Company with the
Securities and Exchange Commission on April 17, 1997.

Earnings Summary

     Net income for the quarter ended June 30, 1997 was $45.7  million,  or $.48
pro forma per share,  compared to pro forma net income of $37.1 million, or $.40
pro forma per share, for the quarter ended June 30, 1996. Net income for the six
months  ended  June 30,  1997 was $ 88.9  million,  or $.94 pro forma per share,
compared to pro forma net income of $70.7 million,  or $.76 pro forma per share,
for the  first six  months  of 1996.  As  described  in Note B to the  Company's
condensed consolidated  financial statements,  the Company's historical earnings
per share  have not been  presented  because  prior to June 10,  1997 all of the
Company's common stock was held by its former parent, Providan Corporation,  and
such information would not be meaningful.

     The overall  growth in earnings for the quarter was primarily  attributable
to the growth in managed outstandings, higher net interest margins and increases
in  non-interest  fee income.  Managed  loan  outstandings  increased  from $7.9
billion at June 30, 1996 to $9.2 billion as of June 30, 1997, which reflects the
impact of the Company's  solicitation  and marketing  efforts.  On-balance sheet
loans  decreased  from $3.3  billion at June 30, 1996 to $2.9 billion as of June
30, 1997 as loan growth was offset by the  completion  of loan  securitizations,
net of related  amortization,  totaling $1.7 billion.  Managed loans outstanding
increased  from $8.9  billion as of December 31, 1996 to $9.2 billion as of June
30, 1997,  a moderate  increase of 3% that is  consistent  with the industry and
reflects  tightening of the  Company's  credit  standards  and general  economic
conditions.

     Return on average  total  assets for the three  months ended June 30, 1997,
was 1.71%  compared to 1.86% for the same period during 1996.  This lower return
is  primarily a result of a higher  proportion  of  investment  security  assets
maintained for liquidity purposes.  Return on average  shareholders'  equity for
the three months ended June 30, 1997 was 37.60% compared to 43.92% pro forma for
the same period last year.  This lower  return on average  shareholder's  equity
resulted  from the increase in earnings for the quarter  being offset by an even
greater increase in average shareholders' equity for the quarter.

Managed Loan Portfolio

     The Company's  consumer loan products include  unsecured and secured credit
cards,  unsecured  revolving  lines of credit,  and secured home equity lines of
credit.  Since  1989,  the  Company has  securitized  unsecured  credit card and
revolving lines of credit and,  beginning in 1996, has  securitized  home equity
lines of credit.  Securitized  assets are not  considered  assets of the Company
and, therefore, are not shown on the statement of financial condition.

     The Company  services the accounts  underlying  the  securitized  loans and
earns a stated monthly servicing fee which generally offsets the servicing costs
incurred by the  Company.  The finance  charge and fee revenue  generated by the
securitized  loans,  in excess of interest  paid to  investors,  related  credit
losses,  the stated servicing fee and other credit enhancement costs and program
expenses,  is recognized as loan servicing income as it accrues over the life of
the  transaction.  This  component  of loan  servicing  income is referred to as
excess servicing income.  The effect of this treatment is to reduce net interest
income and the provision for credit losses, and to increase other income, on the
Company's  statement  of income.  For the three  months  ended June 30, 1997 and
1996,  the net interest  income was reduced by $159.6 million and $101.2 mllion,
respectively;  the provision for credit losses was reduced by $123.3 million and
$65.1 million, respectively; and other income was increased by $36.3 million and
$36.1  million,  respectively.  For the six months ended June 30, 1997 and 1996,
the net  interest  income was  reduced  by $300.5  million  and $206.8  million,
respectively;  the provision for credit losses was reduced by $232.8 million and
$114.9  million,  respectively;  and other income was increased by $67.7 million
and $91.9 million, respectively.

     The  following  summarizes  selected  data on the  Company's  managed  loan
portfolio:

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------
                              TABLE 1 - MANAGED CONSUMER LOAN PORTFOLIO INFORMATION
------------------------------------------------------------------------------------------------------------------

                                                             Three Months Ended             Six Months Ended
                                                                  June 30                        June 30
                                                      ------------------------------------------------------------
(Dollars in thousands)                                     1997            1996            1997           1996
                                                      -------------   -------------   -------------  -------------
<S>                                                        <C>             <C>            <C>             <C>

Period-End Balances:
On-balance sheet consumer loans                       $  2,864,782    $  3,293,823    $  2,864,782   $  3,293,823
Securitized consumer loans                               6,379,953       4,571,762       6,379,953      4,571,762
                                                      -------------   -------------   -------------  -------------
    Total managed consumer loan portfolio             $  9,244,735    $  7,865,585    $  9,244,735   $  7,865,585
                                                      =============   =============   =============  =============

Average Balances:
On-balance sheet consumer loans                       $  2,906,059    $  3,613,933    $  3,215,173   $  3,488,951
Securitized consumer loans                               6,296,037       3,921,337       5,962,948      3,736,104
                                                      -------------   -------------   -------------  -------------
    Total average managed consumer loan portfolio     $  9,202,096    $  7,535,270    $  9,178,121   $  7,225,055
                                                      =============   =============   =============  =============


                                                                        Pro Forma                      Pro Forma
                                                                        ---------                      ---------
Operating Data and Ratios: (1)
Reported:
      Average earning assets                          $  3,443,945    $  3,902,248    $  3,708,683   $  3,771,852
      Return on average assets                                4.51%           3.67%           4.21%          3.63%
      Net interest margin (2)                                11.08%           9.08%          10.65%          9.33%
Managed:
      Average earning assets                          $  9,739,982    $  7,823,585    $  9,671,631   $  7,507,956
      Return on average assets                                1.71%           1.86%           1.71%          1.85%
      Net interest margin (2)                                10.47%           9.70%          10.30%         10.19%

(1) 1996 operating results are shown on a pro forma basis.
(2) Net interest margin is equal to net interest income divided by average earning assets.
</TABLE>

Net Interest Income

     Net  interest  income  represents  the interest  earned from the  Company's
on-balance  sheet consumer loans less the related  interest  expense  related to
deposits and borrowings.  As a result of  securitizations of consumer loans, the
volume of on-balance sheet loans, deposits and borrowings will vary over time.

     Net interest  income for the second  quarter of 1997 totaled  $95.4 million
compared  to  $91.8  million  for the same  period  of 1996.  This  increase  is
primarily  attributable to higher net interest  margins earned,  offset by lower
average  on-balance  sheet consumer loans. The annualized net interest margin on
average  earning  assets  during the six months  ended June 30,  1997 was 10.65%
compared  to 9.33% pro  forma,  for the same  period in the prior  year.  Higher
yields on earning  assets and lower  overall  funding costs  contributed  to the
increase in average margins.

Statement of Average Balances, Income and Expense, Yields and Rates

     The  following  table  provides an analysis  of interest  income,  interest
expense,  net interest  margin and average  balance sheet data for the three and
six month  periods  ended June 30, 1997 and 1996,  as prepared  from  historical
financial information:

<TABLE>
<CAPTION>
 ---------------------------------------------------------------------------------------------------------------
 TABLE 2 - STATEMENTS OF AVERAGE BALANCES, INCOME AND EXPENSE, YIELDS AND RATES
----------------------------------------------------------------------------------------------------------------

                                                           Three Months Ended June 30
                                 -------------------------------------------------------------------------------
                                                     1997                                    1996
                                 --------------------------------------   --------------------------------------
(Dollars in Thousands)             Average        Income/       Yield/       Average       Income/      Yield/
                                   Balance        Expense        Rate        Balance       Expense       Rate
                                 -------------  ------------   --------   -------------  ------------  ---------
<S>                                   <C>             <C>        <C>           <C>           <C>          <C>
ASSETS:
Interest-Earning assets
    Consumer loans               $  2,906,059   $   132,216     18.20%    $  3,613,933   $  138,423      15.32%
    Interest-earning cash             108,836         1,482      5.45%         104,591          635       2.43%
    Federal funds sold                294,670         4,106      5.57%          90,492        1,123       4.96%
    Investment securities             134,380         1,895      5.64%          93,224        1,135       4.87%
                                 -------------  ------------   --------   -------------  ------------  ---------
Total interest-earning assets       3,443,945   $   139,699     16.23%       3,902,240   $  141,316      14.49%

Allowance for loan losses            (124,973)                                 (98,400)
Other assets                          738,040                                  234,633
                                 -------------                            -------------
Total assets                     $  4,057,012                             $  4,038,473                                             
                                 =============                            =============

LIABILITIES AND EQUITY:
Interest-bearing liabilities
    Deposits                     $  2,825,265   $    37,955      5.37%    $  2,540,270   $   35,086       5.52%                    
    Borrowings                        381,540         6,366      6.67%         880,375       14,421       6.55%
                                 -------------  -------------  --------   -------------  ------------  ---------
Total interest-bearing liabilities  3,206,805   $    44,321      5.53%       3,420,645   $   49,507       5.79%          

Other liabilities                     203,803                                  214,596
                                 -------------                            -------------
Total liabilities                   3,410,608                                3,635,241

Capital securities                    160,000                                    -

Equity                                486,404                                  403,232
                                 -------------                            -------------
Total liabilities and equity     $  4,057,012                             $  4,038,473                                      
                                 =============                            =============

NET INTEREST SPREAD:                                            10.70%                                    8.70%
                                                               ========                                =========
Interest income to
    average interest-earning assets                             16.23%                                   14.49%
Interest expense to
    average interest-earning assets                              5.15%                                    5.07%
                                                               --------                                ---------
Net interest margin                                             11.08%                                    9.42%
                                                               ========                                =========
</TABLE>



<TABLE>
<CAPTION>

                                                              Six Months Ended June 30
                                 -----------------------------------------------------------------------------------
                                                       1997                                      1996
                                 ----------------------------------------  -----------------------------------------
(Dollars in Thousands)             Average          Income/       Yield/       Average        Income/       Yield/
                                   Balance          Expense        Rate        Balance        Expense        Rate
                                 ------------     ------------   --------    -------------   ------------  ---------
<S>                                    <C>             <C>         <C>           <C>             <C>          <C>
ASSETS:
Interest-Earning assets
    Consumer loans               $  3,215,173     $  278,541      17.33%     $  3,488,951    $ 271,534      15.57%                  
    Interest-earning cash             104,205          2,771       5.32%          117,057        1,424       2.43%
    Federal funds sold                302,192          8,167       5.41%           71,747        1,803       5.03%
    Investment securities              87,113          2,391       5.49%           94,100        2,249       4.78%
                                 -------------    -----------   --------     -------------   ----------    -------
Total interest earning assets       3,708,683     $  291,870      15.74%        3,771,855    $ 277,010      14.69%

Allowance for loan losses            (121,142)                                    (97,403)
Other assets                          633,102                                     223,468
                                  ------------                               -------------
Total assets                      $ 4,220,643                                $  3,897,920
                                  ============                               =============


LIABILITIES AND EQUITY:
Interest-bearing liabilities
    Deposits                      $ 3,040,706        81,967       5.39%      $  2,417,245       66,102       5.47%                 
    Borrowings                        391,213        12,452       6.37%           858,306       28,528       6.65%
                                  ------------    -----------   --------     -------------   ----------    -------
Total interest-bearing liabilities  3,431,919        94,419       5.50%         3,275,551       94,630       5.78%                

Other liabilities                     167,566                                     236,985
                                  ------------                               -------------
Total liabilities                   3,599,485                                   3,512,536

Capital securities                    129,945                                     -

Equity                                491,213                                     385,384
                                  ------------                               -------------
Total liabilities and equity      $ 4,220,643                                $  3,897,920
                                  ============                               =============

NET INTEREST SPREAD:                                             10.24%                                     8.91%
                                                                ========                                   =======

Interest income to
    average interest earning assets                              15.74%                                    14.69%
Interest expense to
    average interest earning assets                               5.09%                                     5.02%
                                                                --------                                   -------
Net interest margin                                              10.65%                                     9.67%
                                                                ========                                   =======
</TABLE>

Interest Volume and Rate Variance Analysis

     Net  interest  income is affected by changes in the average  interest  rate
earned  on  interest-earning  assets  and  the  average  interest  rate  paid on
interest-bearing  liabilities.  In addition,  net interest income is affected by
changes  in  the  volume  of   interest-earning   assets  and   interest-bearing
liabilities.  The quarter ended June 30, 1997 compared to the prior year quarter
reflects increased  securitization activity in 1997 which has reduced on-balance
sheet loans. This  securitization  activity has the effect of removing unsecured
loans from the balance sheet, leaving a higher proportion of secured credit card
loans,  which are higher yielding assets,  on-balance sheet. The following table
sets forth the dollar amount of the increase  (decrease) in interest  income and
interest expense resulting from changes in the volume, rates and yields:

<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------------------------------------
                                    TABLE 3 - INTEREST VARIANCE ANALYSIS
--------------------------------------------------------------------------------------------------------------------------------

                                                Three Months Ended                              Six Months Ended
                                              June 30, 1997 vs. 1996                         June 30, 1997 vs. 1996
                                 -----------------------------------------------------------------------------------------------
                                    Increase           Change due to (1)              Increase            Change due to (1)
(Dollars in thousands)             (Decrease)       Volume             Rate          (Decrease)         Volume          Rate
                                 ---------------   -------------   -------------    ------------     ------------   ------------

<S>                                   <C>               <C>            <C>             <C>               <C>             <C>
Interest Income:
Consumer loans                   $   (6,207)       $  (109,346)    $  103,139       $   7,007        $  (47,459)     $  54,466
Federal funds sold                    2,983              2,829            154           6,364             6,218            146
Other securities                      1,607                586          1,021           1,489              (856)         2,345
                                 -------------     -------------   -------------    ------------     ------------    ------------
    Total interest income            (1,617)          (105,931)       104,314          14,860           (42,097)        56,957

Interest Expense:
Deposits                              2,869              8,478         (5,609)         15,865            18,603         (2,738)
Borrowings                           (8,055)            (9,880)         1,825         (16,076)          (14,915)        (1,161)
                                 -------------     -------------   -------------    ------------     ------------    ------------
    Total interest expense           (5,186)            (1,402)        (3,784)           (211)            3,688         (3,899)
                                 -------------     -------------   -------------    ------------     ------------    ------------
    Net interest income (1)      $    3,569        $  (104,529)    $  108,098       $  15,071        $  (45,785)     $  60,856
                                 =============     =============   =============    ============     ============    ============

(1) The change in interest  due to both volume and rate has been  allocated  in
proportion to the  relationship  of the absolute dollar amounts of the change in
each.  The changes in income and expense are calculated  independently  for each
line in the table.

</TABLE>

Non-interest Income

     Other income consists primarily of loan servicing income and credit product
fee income,  and  represented  approximately  48% of on-balance  sheet  revenues
during the six months ended June 30, 1997 compared to approximately  40% for the
six months ended June 30, 1996.  This  increase  results from  increased  credit
product fee revenue and higher  average  securitized  assets as a percentage  of
average earning assets.

Loan Servicing Income

     Average securitized loans, which exclude principal collections  accumulated
in  principal  funding  accounts  prior to being  paid to  investors,  were $6.3
billion  and $3.9  billion in the three  months  ended  June 30,  1997 and 1996,
respectively.  Loan  servicing  income  increased  58% to $90.5  million for the
quarter  ended June 30, 1997  compared  to $57.2  million for the same period in
1996.

     On January 1, 1997, the Company adopted  Statement of Financial  Accounting
Standards No. 125,  "Accounting for Transfers and Servicing of Financial  Assets
and  Extinguishments of Liabilities"  ("SFAS No. 125"),  effective for financial
asset sales  occurring  after  December 31, 1996.  Under SFAS No. 125, gains are
recognized  at the  time  of  initial  sale  and  each  subsequent  sale of loan
receivables in a securitization.  As a result,  the Company now recognizes gains
from such loan sales as "loan  servicing  income" on its statement of income and
the related  asset as "due from  securitizations"  on its statement of financial
condition.  As a result of the adoption of SFAS No. 125, loan  servicing  income
increased  $16.2  million  and $50.4  million  during the three and six  months,
respectively,  ended  June 30,  1997.  The  increase  in loan  servicing  income
resulting  from the adoption of SFAS No. 125 was largely  offset by  incremental
business development investments and increases in provisions for possible future
credit  losses.  This  increase in loan  servicing  income is not expected to be
representative  of future  periods.  Any future gains that will be recognized by
the Company in  accordance  with SFAS No. 125 will be  dependent  on the timing,
performance and amount of future securitizations. The increase in loan servicing
income is non-recurring  because, for the first nine months of 1997, the Company
will recognize both excess servicing  income  generated by securitized  balances
existing at December 31, 1996,  and gains on  additional  loan sales made during
that  period.  In  accordance  with  SFAS No.  125,  prior  years  have not been
restated.

Credit Product Fee Income

     Credit  product fee income totaled $44.2 million for the quarter ended June
30, 1997 compared to $29.2 million for the prior year quarter.  This increase of
51% resulted from increased  membership fees on secured credit cards,  increased
late and overlimit  fees received from  unsecured and secured loan customers and
increased income from fee-based products.

Non-interest Expense

     Non-interest  expense for the three  months  ended June 30, 1997 was $119.1
million,  an increase of 21% over $98.1 million for the same period in the prior
year.  Salaries and benefits increased $3.2 million, or 9%, to $37.8 million for
the three  months ended June 30,  1997,  compared to $34.6  million for the same
period in the prior  year.  This  increase  reflects  the  hiring of  additional
employees to support increased customer volume and the development of additional
marketing  channels by the  Company.  Solicitation  costs  include  direct mail,
postage, telemarketing and package materials for both new and existing customers
and totaled  $39.9  million for the quarter  ended June 30, 1997, a 51% increase
over  the  prior  year  quarter  total  of  $26.4  million.   This  increase  in
solicitation  costs resulted from continued  investment in business  development
including  telemarketing  capabilities and other initiatives designed to improve
customer activation and retention.

Income Taxes

     The  Company's  income tax expense was $26.7  million for the three  months
ended June 30, 1997  compared to $23.8  million for the three  months ended June
30, 1996. The overall  effective income tax rate declined due to a net reduction
in the  state  tax rate for the  quarter.  The net  reduction  in the  state tax
expense was a result of a decrease  in the state tax rate  during  April and May
and an increase in June associated with the spinoff from Providian  Corporation.
As a result of the spinoff,  the Company  anticipates  higher combined state and
federal tax rates in future periods.

Asset Quality

     Delinquencies and net credit losses  experienced on the Company's  consumer
loan  portfolio  reflect,  among  other  factors,  the  creditworthiness  of the
borrowers,  the average age of accounts  (generally referred to as "seasoning"),
the success of the Company's collection efforts and general economic conditions.

Delinquencies

     An  account  is  contractually  delinquent  if the  minimum  payment is not
received by the next billing date. Interest and fee income continue to accrue on
an account  after the account  becomes  delinquent  (unless  the  customer is in
bankruptcy  or is deceased)  until the loan is either  repaid or recognized as a
credit loss. The following table presents delinquency information as of June 30,
1997 and 1996:

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------
                            TABLE 4 - DELINQUENCIES 
-----------------------------------------------------------------------------------------------------

                                                              June 30
                                ---------------------------------------------------------------------
                                              1997                                  1996
                                --------------------------------    ---------------------------------
                                                       % of                                % of
(Dollars in thousands)                 Loans        Total Loans            Loans        Total Loans
                                ---------------     ------------    ----------------   --------------
     
<S>                                     <C>              <C>                <C>            <C>  
Reported: (1)
Loans outstanding               $   2,864,782         100.00%       $   3,293,823         100.00%
Loans delinquent:
    30 - 60 days                       53,282           1.86               47,225           1.43
    61 - 90 days                       30,320           1.06               23,315           0.71
    91 or more days                    61,124           2.13               41,569           1.26
                                ---------------     ------------    ----------------   --------------
    Total                       $     144,726           5.05%       $     112,109           3.40%
                                ===============     ============    ================   ==============

Managed:
Loans outstanding               $   9,244,735         100.00%       $   7,865,585         100.00%
Loans delinquent:
    30 - 60 days                      153,938           1.67              118,692           1.51
    61 - 90 days                       86,473           0.94               61,616           0.78
    91 or more days                   163,606           1.77              100,470           1.28
                                ---------------     ------------    ----------------   --------------
    Total                       $     404,017           4.37%       $     280,778           3.57%
                                ===============     ============    ================   ==============

(1) Includes consumer loans held for securitization.

</TABLE>

     The managed loan delinquency rate as of June 30, 1997 was 4.37% compared to
4.52% as of March 31, 1997 and 3.57% as of June 30,  1996.  The  decrease in the
managed  delinquency rate over the prior quarter reflects recent  improvement in
delinquent  unsecured  loans,  which was partially  offset by increased rates of
delinquency  on secured  credit  card  outstandings.  The  delinquency  rate for
on-balance  sheet loans was 5.05% as of June 30, 1997 compared to 4.86% at March
31,  1997 and 3.40% at June 30,  1996.  This  increase in the  on-balance  sheet
delinquency rate reflects the Company's secured credit card  outstandings  which
are increasing as a percentage of total  on-balance sheet loans and experience a
higher delinquency rate than the Company's unsecured loans.  Secured credit card
outstandings  are  collateralized  in  whole  or in  part  by  customer  savings
accounts,   which   mitigates  the  increased   risk   associated   with  higher
delinquencies for this product.

Net Credit Losses

     Net credit losses for consumer  loans  consist of the  principal  amount of
charge-offs  resulting  when  customers who are unwilling or unable to pay their
existing loan balances,  including bankrupt and deceased customers, less current
period recoveries on previously charged-off accounts.  Net credit losses exclude
accrued  finance  charge and fee income  which is charged  against  the  related
income at the time of credit loss recognition.  Losses from cardholder  accounts
related to fraudulent activity are included in non-interest expenses.

     The following  table  presents the Company's net credit losses for consumer
loans for the three and six month periods ended June 30, 1997 and 1996:

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------------------
                           TABLE 5 - NET CREDIT LOSSES
-------------------------------------------------------------------------------------------------------------------------

                                                     Three Months Ended                         Six Months Ended
                                                            June 30                                  June 30
                                         --------------------------------------------------------------------------------
(Dollars in thousands)                          1997                  1996                 1997                1996
                                         -----------------     -----------------    -----------------    ---------------- 

<S>                                             <C>                   <C>                 <C>                  <C>    
Reported: (1)
Average loans outstanding                $    2,906,059        $    3,613,934       $    3,215,173       $    3,488,951
Net charge-offs                                  28,465                30,173               57,549               50,141
Net charge-offs as a percentage
of average loans outstanding                       3.92%                 3.34%                3.58%                2.87%

Managed:
Average loans outstanding                $    9,202,096        $     7,535,270      $    9,178,121       $    7,225,055
Net charge-offs                                 151,711                 90,922             290,307              168,000
Net charge-offs as a percentage
of average loans outstanding                       6.59%                  4.83%               6.33%                4.65%

(1) Includes consumer loans held for securitization.

</TABLE>

     Managed net credit loss rates for the three months ended June 30, 1997 were
6.59%  compared to 6.06% for the quarter  ended March 31, 1997 and 4.83% for the
quarter  ended June 30, 1996.  Credit loss rates for the quarter  ended June 30,
1997  compared  to  quarter  ended June 30,  1996 are  consistent  with  general
economic trends and industrywide  consumer credit  performance  including rising
bankruptcy rates.

Allowance and Provision for Possible Credit Losses

     The allowance for possible credit losses is maintained for on-balance sheet
loans. The Company maintains the allowance at a level believed to be adequate to
absorb future credit losses, net of recoveries,  arising from the existing loans
outstanding.  In evaluating the adequacy of the allowance, the Company considers
several factors including general economic conditions, asset quality, seasoning,
security and historical trends in credit losses and delinquencies. The Company's
policy is to recognize  principal  credit losses on unsecured  loans and secured
credit  card loans which  become 180 days  delinquent,  except  that  bankruptcy
accounts are charged-off upon  determination of  post-bankruptcy  collectability
(generally   upon   appropriate   verification)   and   accounts   for  deceased
accountholders are charged-off upon  determination of collectability  (generally
upon   verification   of  no  estate).   Home  equity  loans  are  reviewed  for
collectibility upon becoming 60 days delinquent and credit losses recognized for
the  amount  by which  the book  value of the loan  exceeds  the  estimated  net
realizable value of the underlying security.

     The  following  table sets forth the activity in the allowance for possible
credit losses for the three and six months ended June 30, 1997 and 1996:

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------
                 TABLE 6 - SUMMARY OF ALLOWANCE FOR LOAN LOSSES
------------------------------------------------------------------------------------------------------------------

                                                   Three Months Ended                     Six Months Ended
                                                        June 30                                June 30
                                          ------------------------------------------------------------------------
(Dollars in thousands)                          1997                 1996               1997              1996
                                          ----------------    -----------------   ----------------  --------------
<S>                                             <C>                   <C>               <C>               <C>   

Balance at beginning of period            $      119,258      $     101,812       $    114,540      $     93,429
Provision for loan losses                         38,950             23,831             72,752            52,182
Charge-offs                                      (32,140)           (33,208)           (62,733)          (56,034)
Recoveries                                         3,675              3,035              5,184             5,893
                                          ----------------    -----------------   ----------------  --------------
Net charge-offs                                  (28,465)           (30,173)           (57,549)          (50,141)
                                          ----------------    -----------------   ----------------  --------------
Balance at end of period                  $      129,743      $      95,470       $    129,743      $     95,470
                                          ================    =================   ================  ==============

Allowance for loan losses to loans 
at period-end (1)                                   4.78%              3.65%              4.78%             3.65%

(1) Excludes consumer loans held for securitization.

</TABLE>

Funding and Liquidity

     The Company  maintains  diversified  funding sources  including  direct and
broker retail deposits,  institutional  deposits, term Federal funds, public and
private asset securitizations and a committed revolving credit facility. Funding
is further diversified by product types, industry and geographical location. The
Company offers maturity terms on its funding  products  ranging from one week to
seven years. Maturity distributions are dependent on several factors,  including
expected  asset  duration,  investor  demand,  shape  of  the  yield  curve  and
anticipated issuance in the securitization and capital markets.

     Deposits  decreased  from $3.4  billion  as of  December  31,  1996 to $2.8
billion as of June 30,  1997.  This  decrease is the result of  increased  asset
securitization  during the period and increases in Federal  funds  purchased and
borrowings under the Company's  revolving  credit facility.  The following table
summarizes  the  contractual  maturity  of large  denomination  certificates  of
deposit as of June 30, 1997:

--------------------------------------------------------------------------------
       TABLE 7 - MATURITIES OF CERTIFICATES OF DEPOSIT OF $100,000 OR MORE
--------------------------------------------------------------------------------

                                                       June 30
                                         ---------------------------------------
(Dollars in thousands)                          1997                 1996
                                         ------------------   ------------------

Less than three months                   $      238,155       $      426,810
Three to six months                             224,377              169,578
Six to twelve months                            262,367              185,436
More than twelve months                         543,738              315,578
                                         ------------------   ------------------
     Total                               $    1,268,637       $     1,097,402
                                         ==================   ==================

     Interest expense on borrowings for the quarter ended June 30, 1997 was $6.4
million  compared to $14.4  million in the  quarter  ended June 30,  1996.  This
decrease was the result of lower average  funding from Federal  funds  purchased
and notes payable to banks.

     The Company  maintains a $1.2 billion  committed  revolving credit facility
from a syndicate  of domestic  and  international  banks which is  scheduled  to
expire in May 1999.  Borrowings under this credit facility are available to four
of the Company's  subsidiaries,  First Deposit National Bank, Providian National
Bank,  Providian Bank and Providian Credit Corporation ( the "Borrowers"),  and
the credit facility is guaranteed by Providian Financial Corporation. As of June
30, 1997 borrowings under the credit facility totaled $148 million.  Among other
covenants,  the credit facility contains certain financial covenants  applicable
to the Company, including consolidated asset return and capital requirements and
a loan delinquency  test. In addition,  certain financial ratios are required to
be  maintained  by the  Borrowers.  The unused  commitment  is  available to the
Borrowers as funding needs may arise.

     During the quarter  ended June 30,  1997,  the Company  entered into a $100
million, 364-day credit facility under which short-term borrowings are available
to Providian Financial Corporation for general corporate purposes. This facility
contains  financial  covenants  generally  similar  to  those  contained  in the
Company's revolving credit facility described in the preceding paragraph.

     The  securitization  of  consumer  loans  is a  significant  source  of the
Company's  funding.  Commercial  paper-based  conduit  facilities  are  used  to
securitize unsecured credit card and home equity line of credit receivables.  As
of June 30, 1997,  the Company had  securitized  $1,530 million of loans through
such conduit facilities. Term securitizations through the Company's master trust
totaled  $4,950  million as of June 30,  1997.  Included in this total is a $700
million,  47 month  securitization the Company completed during the three months
ended June 30, 1997. Amortization of previously securitized loans totaled $717.5
million  during  the  three  months  ended  June 30,  1997 and  amortization  of
securitized loans is expected to continue through 2004. As securitized loans are
paid or reduced by the amount of credit losses during the amortization period of
a  securitization,  the  Company's  funding  requirements  will  correspondingly
increase.  Term  securitizations  typically have principal  accumulation periods
during which  principal  payments are aggregated for repayment to investors.  As
payments  on the loans  accumulate  and new loans are not  securitized,  the new
loans are funded by the Company through alternate sources.

     In February 1997,  Providian  Capital I, a subsidiary trust of the Company,
issued  $160  million  aggregate  amount  of  mandatorily   redeemable   capital
securities  bearing  interest  at 9.525%  which  mature in  February  2027.  The
proceeds of the offering were used by the Company to redeem  preferred  stock of
$63.2 million and to repay notes payable to  affiliates  of $42.5  million;  the
remainder was available for general corporate purposes.

     The Company's goal for liquidity  management is to ensure that funding will
be available to support Company operations in varying business environments.  In
addition to the committed  revolving  credit facility,  the Company  maintains a
portfolio  of  high-quality  securities  such  as U.S.  government  obligations,
commercial paper, interest bearing deposits with other banks, Federal funds sold
and other cash equivalents in order to provide additional liquidity.  Investment
securities  have  increased  from $7.2 million as of December 31, 1996 to $154.6
million as of June 30, 1997. Federal funds sold increased from $172.3 million to
$279.8 million over the same time period.

Capital Adequacy

     Each of the Company's  banking  subsidiaries,  First Deposit National Bank,
Providian  National  Bank and Providian  Bank, is subject to risk-based  capital
adequacy guidelines as defined by its primary federal regulator. Failure to meet
minimum  capital  requirements  can  initiate  certain  mandatory  and  possible
additional discretionary actions by regulators that could have a material effect
on the consolidated  financial statements of the Company.  Under the guidelines,
capital  is defined  as either  Tier 1 (core),  which  consists  principally  of
shareholders'  equity  less  goodwill,  or Tier 2  (supplementary),  which  also
includes a portion of the allowance for possible  credit losses.  Based on those
definitions of capital,  the regulations  further define three capital  adequacy
ratios which are used to measure whether a financial  institution achieves "well
capitalized"  or  "adequately   capitalized"   status.   A  bank  is  considered
"adequately  capitalized" if the Total  Risk-Based,  Tier 1 and Leverage capital
ratios are at least 8%, 4% and 4%, respectively. In order to be considered "well
capitalized" a bank must maintain Total Risk-Based, Tier 1, and Leverage capital
ratios of 10%,  6% and 5%,  respectively.  As of June 30,  1997,  the  Company's
banking  subsidiaries  maintained  "well  capitalized"  status in all risk-based
capital ratio categories as set forth below:





                                        First Deposit     Providian
                                           National        National    Providian
          Capital Ratio                      Bank            Bank        Bank
---------------------------------------  -------------    ---------    ---------
Total Risk-Based (Tier 1 + Tier 2/
  Total risk-based assets)                  11.23%          14.62%      24.23%
Tier 1 (Tier 1/Total risk-based assets)      9.97%          13.35%      22.94%
Leverage (Tier 1/Average total assets 
  less intangibles)                         14.37%          21.69%      25.21%

     On August 7, 1997,  the Board of Directors of the Company  approved a third
quarter dividend of $.05 per share payable on September 15, 1997 to shareholders
of record on  September  1, 1997,  totaling  $4.8  million  for all  outstanding
shares.  The payment of common stock  dividends by the Company may in the future
be limited by certain factors  including  regulatory  capital  requirements  and
financial  covenants  relating to the maintenance of capital under the Company's
revolving credit facility.  In addition, if the Company defers interest payments
on the junior subordinated debentures supporting dividend payments to holders of
Providian Capital I's manditorily  redeemable capital  securities,  dividends on
the Company's common stock may not be declared.

     The primary  source of funds for payment of  shareholder  dividends  by the
Company is dividends  from the  Company's  banking  subsidiaries.  The amount of
dividends  a bank may  declare  in any year is  subject  to  certain  regulatory
restrictions.  Dividends are generally  limited to current year net profits,  as
defined  by  regulatory  agencies,  combined  with  retained  net income for the
preceding two years,  provided that following the declaration of such dividends,
the bank remains well capitalized.  As of June 30, 1997, the amount available to
be paid as dividends to the Company by its banking  subsidiaries  totaled $100.6
million.

Off-Balance Sheet Risk

     The Company is subject to  off-balance  sheet risk in the normal  course of
business,  including risks associated with commitments to extend credit,  excess
servicing income from  securitizations and interest rate swap and cap agreements
("swaps" and "caps").  The Company actively manages interest rate risk,  seeking
to maintain a relatively  interest rate neutral position,  by generally matching
repricing  characteristics  of assets and liabilities.  In doing so, the Company
has  selectively  entered into swaps and caps which  involve  elements of credit
and/or interest rate risk in excess of the amount recognized on the statement of
financial  condition.   All  swap  and  cap  transactions  are  over-the-counter
transactions  executed with highly rated United States and  international  banks
under standard form Master Agreements of the International Swaps and Derivatives
Association,  Inc. ("ISDA"),  and hedge identified  interest rate risks for both
accounting and tax purposes.

     The following tables present a summary of swap activity as well as notional
value of caps for the  three and six  months  ended  June 30,  1997 and 1996 and
their respective maturities as of June 30, 1997:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
                          TABLE 8 - SUMMARY OF INTEREST RATE SWAPS
---------------------------------------------------------------------------------------------------------------------

                                                   Three Months Ended                      Six Months Ended
                                                         June 30                               June 30
                                       ------------------------------------------------------------------------------
(Dollars in thousands)                        1997                 1996                1997                1996
                                       -----------------    -----------------   -----------------  ------------------
                                                                      Notional Amount
<S>                                           <C>                   <C>                <C>                 <C>
Pay Fixed/Receive Variable:
      Beginning                        $     120,000        $     327,000       $     120,000      $     550,000
           Additions                            -                  21,000                -                43,500
           Maturities                           -                 160,250                -               405,750
                                       -----------------    -----------------   -----------------  ------------------
      Ending                           $     120,000        $     187,750       $     120,000      $     187,750
                                       =================    =================   =================  ==================

Receive Fixed/Pay Variable:
      Beginning                        $     970,500        $     456,823       $     970,500      $     654,556
           Additions                          30,000              520,000              63,333            570,000
           Maturities                        165,000                2,872             198,333            250,605
                                       -----------------    -----------------   -----------------  ------------------
      Ending                           $     835,500        $     973,951       $     835,500      $     973,951
                                       =================    =================   =================  ==================

Receive Variable/Pay Variable:
      Beginning                        $        -           $     200,000       $     200,000      $     200,000
           Additions                            -                    -                   -                  -
           Maturities                           -                    -                200,000               -
                                       -----------------    -----------------   -----------------  ------------------
      Ending                           $        -           $     200,000       $        -         $     200,000
                                       =================    =================   =================  ==================

Total Notional Amount
      Beginning                        $   1,090,500        $     983,823       $   1,290,500      $   1,404,556
           Additions                          30,000              541,000              63,333            613,500
           Maturities                        165,000              163,122             398,333            656,355
                                       -----------------    -----------------   -----------------  ------------------
      Ending                           $     955,500        $   1,361,701       $     955,500      $   1,361,701
                                       =================    =================   =================  ==================
</TABLE>

<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------
           TABLE 9 - MATURITY OF INTEREST RATE SWAPS AND CAPS
---------------------------------------------------------------------------------------------------------------

(Dollars in thousands)                 Balance at                        Balances maturing in:
                                                       --------------------------------------------------------
                                      June 30, 1997        1997          1998          1999        Thereafter
                                      --------------   ------------  ------------  ------------  --------------
<S>                                        <C>              <C>          <C>            <C>            <C>  
Pay Fixed/Receive Variable:
   Notional Value                     $   120,000      $     -       $   120,000   $     -         $    -                          
   Weighted Average Pay Rate                 6.24%           -    %         6.24%        -   %          -   %
   Weighted Average Receive Rate (1)         5.81%           -    %         5.81%        -   %          -   %

Receive Fixed/Pay Variable:
   Notional Value                     $   835,500      $   166,667   $   533,333   $   85,500    $    50,000                 
   Weighted Average Pay Rate (1)             5.74%            5.69%         5.74%        5.82%          5.77%
   Weighted Average Receive Rate             6.35%            6.18%         6.14%        7.73%          6.84%

Receive Variable/Pay Variable:
   Notional Value                     $     -          $     -       $       -     $      -      $      -       
   Weighted Average Pay Rate                -    %           -    %          -  %         -  %          -   %
   Weighted Average Receive Rate            -    %           -    %          -  %         -  %          -   %

Total Notional Value                  $   955,500      $   166,667   $   653,333   $   85,500    $    50,000                      
   Weighted Average Pay Rate (1)             5.80%            5.69%         5.85%        5.82%          5.77%
   Weighted Average Receive Rate (1)         6.28%            6.18%         6.07%        7.73%          6.84%

(1) Variable rates are held constant for future periods at their effective rates
as of their most recent reset prior to June 30, 1997.

--------------------------------------------------------------------------------------------------------------
Caps:
   Notional Value                     $ 1,347,200      $    84,000   $   457,700   $  800,000    $     5,500   
   Weighted Average Strike Rate             11.08%            9.00%         9.90%       12.00%          6.75%

</TABLE>


<PAGE>


PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings.

     Various  legal  actions  arising in the  ordinary  course of  business  are
pending against the Company. None of the litigation pending against the Company,
individually or  collectively,  is expected to have a material adverse effect on
the Company's financial condition, results of operations or liquidity.

Item 4.  Submission of Matters to a Vote of Security Holders.

     On  May  30,  1997,   the  Company's  then  sole   shareholder,   Providian
Corporation,  in a written  consent  of  shareholder,  approved  changes  to the
Company's  Certificate of  Incorporation,  including the change of the Company's
name to Providian Financial Corporation.

Item 5.  Other Information.

     On May 30,  1997,  the  name of the  Company  was  changed  from  Providian
Bancorp, Inc. to Providian Financial Corporation.

     On June 10, 1997,  Providian  Corporation (the "Former  Parent"),  then the
sole  shareholder of the Company,  distributed to the  shareholders of record of
the common stock of the Former Parent as of such date,  on a one-for-one  basis,
all of the outstanding  shares of Common Stock,  $.01 par value, of the Company,
pursuant to the Distribution Agreement dated as of December 28, 1997 between the
Former  Parent  and the  Company,  together  with one  related  preferred  share
purchase right for each share of Common Stock. No consideration  was paid by the
shareholders  of the Former Parent for the receipt of the shares of Common Stock
of the Company and preferred share purchase rights in the spinoff.

     The spinoff is more fully  described in an Information  Statement made part
of the  Registration  Statement on Form 10 (No.  1-12897)  under the  Securities
Exchange Act of 1934,  as amended,  as previously  filed with the  Commission on
April 17, 1997.

Item 6.  Exhibits and Reports on Form 8-K.

     (a) Exhibits Required by Item 601 of Regulation S-K.

     Exhibit 3.1   Amended  and  Restated  Certificate  of  Incorporation  of 
                   the Company.

     Exhibit 3.2   Amended Bylaws of the Company.

     Exhibit 4.1   Certificate of Designation of Series A Junior Participating 
                   Preferred Stock dated June 1, 1997.

     Exhibit 10.1  Rights Agreement dated as of June 1, 1997 between the Company
                   and First Chicago Trust Company of New York.

     Exhibit 10.2  1997 Stock Option Plan (incorporated by reference to the
                   Company's Registration Statement on Form S-8 (No. 333-28767)
                   filed on June 9, 1997).

     Exhibit 10.3  Stock Ownership Plan (incorporated by reference to the 
                   Company's Registration Statement on Form S-8 (No. 333-28767)
                   filed on June 9, 1997).

     Exhibit 27.1  Financial Data Schedule.

     (b) Reports on Form 8-K.

     The Company filed a Current Report on Form 8-K on June 25, 1997  containing
pro forma condensed  financial  information of the Company and its subsidiaries,
giving  effect to the  spinoff  and the  issuance  of  capital  securities  by a
subsidiary trust of the Company.


<PAGE>

                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                           PROVIDIAN FINANCIAL CORPORATION
                                           -------------------------------
                                                    (Registrant)


Date: August 14 , 1997                     By  / s / David J. Petrini
                                               -----------------------
                                               David J. Petrini
                                               Senior Vice President and
                                               Chief Financial Officer
                                               (Principal Financial Officer and
                                               Duly Authorized Signatory)


Date: August 14 , 1997                     By  / s / Daniel Sanford
                                               -----------------------
                                               Daniel Sanford
                                               Vice President and Controller
                                               (Chief Accounting Officer and
                                               Duly Authorized Signatory)

<PAGE>


                                 EXHIBIT INDEX

Exhibit No.


Exhibit 3.1    Amended and Restated Certificate of Incorporation of the Company

Exhibit 3.2    Amended and Restated By-Laws of the Company

Exhibit 4.1    Certificate of Designations of Series A Junior Participating
               Preferred Stock dated June 1, 1997

Exhibit 10.1   Rights  Agreement  dated as of June 1, 1997 between the Company
               and First Chicago Trust Company of New York

Exhibit 10.2   1997 Stock  Option Plan  (incorporated  by  reference  to the
               Company's  Registration  Statement on Form S-8 (No.  333-28767)
               filed on June 9, 1997).

Exhibit 10.3   Stock  Ownership Plan  (incorporated  by  reference  to the
               Company's  Registration  Statement on Form S-8 (No.  333-28767)
               filed on June 9, 1997).

Exhibit 27.1   Financial Data Schedule