UNITED STATES
                       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 March 31, 2000

                                       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 of
1934  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 April 28, 2000, there were 142,488,533 shares of the registrant's
Common Stock, par value $0.01 per share, outstanding.


<PAGE>

                         PROVIDIAN FINANCIAL CORPORATION
                                    FORM 10-Q

                                      INDEX

                                 March 31, 2000


PART I.   FINANCIAL INFORMATION                                             Page
                                                                            ----

          Item 1.   Financial Statements (unaudited):
                        Condensed Consolidated Statements of Financial
                         Condition.............................................3
                        Condensed Consolidated Statements of Income............4
                        Condensed Consolidated Statements of Changes in
                         Shareholders' Equity..................................5
                        Condensed Consolidated Statements of Cash Flows........6
                        Notes to Condensed Consolidated Financial
                         Statements............................................7

          Item 2.   Management's Discussion and Analysis of Financial
                        Condition and Results of Operations...................10

PART II.  OTHER INFORMATION

          Item 1.   Legal Proceedings.........................................26

          Item 6.   Exhibits and Reports on Form 8-K..........................27

Signatures....................................................................28


<PAGE>


PART I.  FINANCIAL INFORMATION

Item 1.   Financial Statements.

<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
PROVIDIAN FINANCIAL CORPORATION AND SUBSIDIARIES
<CAPTION>
                                                                                   (Unaudited)
                                                                                     March 31              December 31
(dollars in thousands)                                                                 2000                    1999
---------------------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>                      <C>
ASSETS
   Cash and cash equivalents                                                      $   313,725              $   182,915
   Federal funds sold and securities
     purchased under resale agreements                                              1,232,428                1,298,000
   Investment securities:
      Available-for-sale                                                            1,580,677                  455,238
      Held-to-maturity                                                                809,786                  126,258
   Loans receivable, less allowance for credit losses of $1,160,360
     at March 31, 2000 and $1,028,377 at December 31, 1999                         11,483,501               10,545,173
   Premises and equipment, net                                                        171,003                  149,194
   Interest receivable                                                                119,920                  108,087
   Due from securitizations                                                           662,214                  614,217
   Deferred taxes                                                                     625,588                  571,040
   Other assets                                                                       310,147                  290,755
                                                                                -------------------------------------------
          Total assets                                                            $17,308,989              $14,340,877
                                                                                ===========================================

LIABILITIES
   Deposits:
       Non-interest bearing                                                       $    62,862              $    63,890
       Interest bearing                                                            13,058,968               10,474,233
                                                                                -------------------------------------------
                                                                                   13,121,830               10,538,123

   Short-term borrowings                                                              216,281                  126,289
   Long-term borrowings                                                               899,951                  958,056
   Deferred fee revenue                                                               562,409                  578,607
   Accrued expenses and other liabilities                                             838,769                  647,326
                                                                                -------------------------------------------
          Total liabilities                                                        15,639,240               12,848,401

Company obligated mandatorily  redeemable capital securities of subsidiary trust
  holding solely junior subordinated deferrable
  interest debentures of the Company (capital securities)                             160,000                  160,000
SHAREHOLDERS' EQUITY
Common stock, par value $0.01 per share (authorized: 800,000,000
  shares; issued and outstanding: March 31, 2000--142,456,720
  shares; December 31, 1999--142,066,407 shares)                                          954                      954
Retained earnings                                                                   1,532,351                1,394,293
Cumulative other comprehensive income                                                   1,179                   (2,161)
Common stock held in treasury--at cost: (March 31, 2000--
  663,260 shares; December 31, 1999--1,053,573 shares)                                (24,735)                 (60,610)
                                                                                -------------------------------------------
          Total shareholders' equity                                                1,509,749                1,332,476
                                                                                -------------------------------------------
          Total liabilities and shareholders' equity                              $17,308,989              $14,340,877
                                                                                ===========================================

See Notes to Condensed Consolidated Financial Statements.

</TABLE>
<PAGE>
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
PROVIDIAN FINANCIAL CORPORATION AND SUBSIDIARIES
<CAPTION>

                                                                                Three Months Ended
                                                                                      March 31
(dollars in thousands, except per share data)                              2000                    1999
----------------------------------------------------------------------------------------------------------
<S>                                                                      <C>                     <C>
INTEREST INCOME
     Loans                                                               $ 576,726               $ 279,125
     Federal funds sold and securities
       purchased under resale agreements                                    31,735                   5,704
     Other                                                                  19,438                   6,787
                                                                         ---------------------------------
Total interest income                                                      627,899                 291,616

INTEREST EXPENSE
     Deposits                                                              185,887                  64,439
     Borrowings                                                             18,771                  16,062
                                                                         ---------------------------------
Total interest expense                                                     204,658                  80,501

          Net interest income                                              423,241                 211,115

Provision for credit losses                                                361,213                 182,073
                                                                         ---------------------------------


          Net interest income after provision
            for credit losses                                               62,028                  29,042

NON-INTEREST INCOME
     Servicing and securitizations                                         154,083                 131,211
     Credit product fee income                                             546,418                 341,810
     Other                                                                  27,039                   4,235
                                                                         ---------------------------------
                                                                           727,540                 477,256

NON-INTEREST EXPENSE
     Salaries and employee benefits                                        174,980                  95,987
     Solicitation and advertising                                          112,122                  99,447
     Occupancy, furniture, and equipment                                    30,599                  15,304
     Data processing and communication                                      40,618                  24,762
     Other                                                                 140,752                  81,606
                                                                         ---------------------------------
                                                                           499,071                 317,106
                                                                         ---------------------------------
          Income before income taxes                                       290,497                 189,192

Income tax expense                                                         116,179                  75,646
                                                                         ---------------------------------

          Net Income                                                     $ 174,318               $ 113,546
                                                                         =================================

Earnings per common share - basic                                        $    1.23               $    0.80
                                                                         =================================

Earnings per common share - assuming dilution                            $    1.20               $    0.78
                                                                         =================================

Cash dividends paid per common share                                     $    0.05               $    0.05
                                                                         =================================

Weighted average common shares
   outstanding - basic (000)                                               141,640                 141,247
                                                                         =================================

Weighted average common shares
   outstanding - assuming dilution (000)                                   145,250                 145,502
                                                                         =================================


See Notes to Condensed Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)
PROVIDIAN FINANCIAL CORPORATION AND SUBSIDIARIES
<CAPTION>

                                                                                            Cumulative       Common
                                                               Additional                      Other          Stock
                                                    Common      Paid-In      Retained       Comprehensive    Held in
(dollars in thousands, except per share data)       Stock       Capital      Earnings          Income        Treasury       Total
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>        <C>           <C>            <C>              <C>            <C>
BALANCE AT DECEMBER 31, 1998                        $ 954      $      -      $  866,005     $ (320)          $ (63,452)  $  803,187
Comprehensive income:
    Net Income                                                                  113,546                                     113,546
    Other comprehensive income, net of income tax:
          Unrealized gain on securities net of
            income taxes of ($94)                                                              159                              159
                                                                                                                         -----------
Comprehensive income                                                                                                        113,705
Cash dividend: Common - $0.05 per share                                          (7,089)                                     (7,089)
Purchase of 275,496 common shares for treasury                   19,348                                        (27,617)      (8,269)
Exercise of stock options and other awards                      (26,230)          3,979                         29,858        7,607
Issuance of restricted and unrestricted stock less
    forfeited shares                                               (404)                                         8,495        8,091
Deferred compensation related to grant of
    restricted and unrestricted stock less
    amortization of $2,164                                       (5,925)                                                     (5,925)
Net tax effect from employee stock plans                         13,211                                                      13,211
                                                  ----------------------------------------------------------------------------------
BALANCE AT MARCH 31, 1999                          $ 954       $      -      $  976,441     $  (161)         $ (52,716)  $  924,518
                                                  ==================================================================================

BALANCE AT DECEMBER 31, 1999                       $ 954       $      -      $1,394,293     $ (2,161)        $ (60,610)  $1,332,476
Comprehensive income:
    Net Income                                                                  174,318                                     174,318
    Other comprehensive income, net of income tax:
          Unrealized gain on securities net of
               income taxes of ($2,340)                                                        3,510                          3,510
          Foreign currency translation adjustments
               net of income taxes of $113                                                      (170)                          (170)
                                                                                                                         -----------
    Other comprehensive income                                                                                                3,340
                                                                                                                         -----------
Comprehensive income                                                                                                        177,658
Cash dividend: Common - $0.05 per share                                          (7,121)                                     (7,121)
Purchase of 31,485 common shares for treasury                         -                                         (2,342)      (2,342)
Exercise of stock options and other awards                       23,395         (29,139)                         7,999        2,255
Issuance of restricted and unrestricted stock less
    forfeited shares                                             (8,701)                                        30,218       21,517
Deferred compensation related to grant of
    restricted and unrestricted stock less
    amortization of $3,134                                      (18,383)                                                    (18,383)
Net tax effect from employee stock plans                          3,689                                                       3,689
                                                  ----------------------------------------------------------------------------------
BALANCE AT MARCH 31, 2000                          $ 954       $      -      $1,532,351     $  1,179         $ (24,735)  $1,509,749
                                                  ==================================================================================

See Notes to Condensed Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
PROVIDIAN FINANCIAL CORPORATION AND SUBSIDIARIES
<CAPTION>
                                                                                                   Three Months Ended
                                                                                                         March 31
(dollars in thousands)                                                                            2000             1999
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                                           <C>              <C>
OPERATING ACTIVITIES
    Net Income                                                                                $  174,318       $  113,546
    Adjustments to reconcile net income to net cash provided by operating activities:
      Provision for credit losses                                                                361,213          182,073
      Depreciation and amortization of premises and equipment                                     11,489            7,418
      Amortization of net loan acquisition costs                                                   7,443           11,201
      Amortization of deferred compensation
        related to restricted and unrestricted stock                                               3,134            2,164
      Amortization of deferred fee revenue                                                      (211,341)        (118,405)
      Increase in deferred income tax benefit                                                    (56,775)         (64,709)
      Increase in deferred fee revenue                                                           195,143          190,311
      Increase in interest receivable                                                            (11,833)          (9,433)
      Net increase in other assets                                                               (27,081)         (52,156)
      Net increase in accrued expenses and other liabilities                                     195,132           40,702
                                                                                              ----------------------------
                          Net cash provided by operating activities                              640,842          302,712

INVESTING ACTIVITIES
      Net (increase) decrease in money market instrument investments                            (683,528)         119,867
      Net cash used for loan originations and principal
        collections on loans receivable                                                       (1,310,885)      (1,048,735)
      Net increase (decrease) in securitized loans                                                11,307          (20,187)
      Portfolio acquisitions                                                                           -         (127,119)
      Increase in due from securitizations                                                       (47,997)          (2,205)
      Purchases of investment securities                                                      (1,140,930)         (71,046)
      Proceeds from maturities of  investment securities                                          21,341           45,372
      Decrease (increase) in federal funds sold and securities purchased
        under resale agreements                                                                   65,572         (302,925)
      Net purchases of premises and equipment                                                    (33,298)         (16,033)
                                                                                              -----------------------------
                          Net cash used by investing activities                               (3,118,418)      (1,423,011)

FINANCING ACTIVITIES
      Net increase in deposits                                                                 2,583,707          543,031
      Proceeds from issuance of term federal funds                                               330,000          430,000
      Repayment of term federal funds                                                           (230,009)        (447,500)
      Decrease in other short-term borrowings                                                     (9,999)               -
      (Decrease) increase in long-term borrowings                                                (58,105)         549,502
      Purchase of treasury stock                                                                  (2,342)          (8,269)
      Dividends paid                                                                              (7,121)          (7,089)
      Proceeds from exercise of stock options                                                      2,255            7,607
                                                                                              -----------------------------
                          Net cash provided by financing activities                            2,608,386        1,067,282
                                                                                              -----------------------------

Net increase (decrease) in cash and cash equivalents                                             130,810          (53,017)
Cash and cash equivalents at beginning of period                                                 182,915          176,348
                                                                                              -----------------------------
Cash and cash equivalents at end of period                                                    $  313,725       $  123,331
                                                                                              =============================

See Notes to Condensed Consolidated Financial Statements.
</TABLE>
<PAGE>


PROVIDIAN FINANCIAL CORPORATION
Notes to Condensed Consolidated Financial Statements
March 31, 2000  (Unaudited)

Note 1 - Basis of Presentation
     The condensed  consolidated  financial  statements  include the accounts of
Providian   Financial   Corporation  and  its  wholly  owned  subsidiaries  (the
"Company").  The  Company's  subsidiaries  offer a  range  of  consumer  lending
products, deposit products and membership products marketed through direct mail,
Internet and other channels. The principal operating subsidiaries of the Company
are Providian National Bank and Providian Bank, 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.

     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 to a fair  statement of the
results for the interim period presented 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 three month period
ended March 31, 2000 are not necessarily  indicative of the results for the year
ended December 31, 2000. The notes to the financial  statements contained in the
Company's Annual Report on Form 10-K for the year ended December 31, 1999 should
be read in conjunction with these condensed  consolidated  financial statements.
All significant  intercompany  balances and  transactions  have been eliminated.
Certain  prior  period  amounts  have been  reclassified  to conform to the 2000
presentation.

Note 2 - Earnings Per Share
     The following table sets forth the computation of both the basic and
assumed conversion methods of earnings per share.

<TABLE>
<CAPTION>
                                                                        Three Months Ended
                                                                              March 31
    (dollars in  thousands, except per share data)                   2000                 1999
    ------------------------------------------------------------------------------------------------
    <S>                                                        <C>                  <C>

    Net Income                                                 $    174,318         $    113,546
                                                               =====================================
    Weighted average common shares outstanding--
    basic                                                           141,640              141,247
    Effect of dilutive securities
       Restricted stock issued--non vested                              619                  518
       Employee stock options (1)                                     2,745                3,737
       Forward purchase contracts                                       246                   --
                                                               -------------------------------------
    Dilutive potential common shares                                  3,610                4,255
                                                               -------------------------------------
    Adjusted weighted average common shares and
      assumed conversions                                           145,250              145,502
                                                               =====================================

    Earnings per common share--basic                           $       1.23          $      0.80
                                                               =====================================

    Earnings per common share--assuming dilution               $       1.20          $      0.78
                                                               =====================================
</TABLE>

     (1)  During the three  months  ended  March 31,  2000,  options to purchase
          2,921,000  shares of the  Company's  common stock were not included in
          the  computation  of diluted  earnings per common  share,  because the
          exercise  price of the  options was  greater  than the average  market
          price of the common  shares  and,  therefore,  the  inclusion  of such
          options would be antidilutive.

Note 3 - Loans Receivable and Allowance for Credit Losses
     The following is a summary of the Company's  loans  receivable at March 31,
2000 and December 31, 1999:

<TABLE>
<CAPTION>

    (dollars in thousands)                                     March 31, 2000      December 31,1999
    ------------------------------------------------------------------------------------------------
    <S>                                                        <C>                  <C>
    Credit cards                                               $ 11,024,843         $ 10,075,185
    Home loans                                                    1,637,979            1,520,795
    Other                                                            18,025               13,974
                                                              --------------------------------------
                                                                 12,680,847           11,609,954
    Allowance for credit losses                                  (1,160,360)          (1,028,377)
    Net deferred origination fees                                   (36,986)             (36,404)
                                                              --------------------------------------
                                                               $ 11,483,501         $ 10,545,173
                                                              ======================================
</TABLE>

     The activity in the  allowance for credit losses for the three months ended
March 31, 2000 and 1999 was as follows:

<TABLE>
<CAPTION>
                                                                    Three Months Ended March 31
    (dollars in thousands)                                          2000                   1999
    ------------------------------------------------------------------------------------------------
    <S>                                                        <C>                   <C>
    Balance at beginning of period                             $  1,028,377         $    451,245
    Provision for credit losses                                     361,213              182,073
    Allowance acquired                                                   --               14,310
    Foreign currency translation                                        (11)                  --
    Credit losses                                                  (255,082)            (115,506)
    Recoveries                                                       25,863               15,533
                                                              --------------------------------------
    Net credit losses                                              (229,219)             (99,973)
                                                              --------------------------------------
    Balance at end of period                                   $  1,160,360         $    547,655
                                                              ======================================
</TABLE>

Note 4 - Shareholders' Equity
     The Company is party to several agreements to purchase, on a forward basis,
shares of its common stock.  At the Company's  election,  the  agreements may be
settled on a physical basis or, subject to certain conditions, on a net basis in
shares of the  Company's  common  stock or in cash.  As of March 31,  2000,  the
agreements  covered 2,256,613 shares of the Company's common stock at a weighted
forward  price of $83.7642  per share.  During the three  months ended March 31,
2000,  the  Company  did  not  make  any  settlements  of the  forward  purchase
agreements. If the agreements had been settled on a net share basis at the March
31, 2000 market price of the  Company's  common stock  ($86.625 per share),  the
Company would have received approximately 74,525 shares of its common stock from
the counterparties.

Note 5 - Cumulative Other Comprehensive Income
     The components of cumulative  other  comprehensive  income,  net of related
tax,  for the  three  months  ended  March 31,  2000 and 1999  were as  follows:

<TABLE>
<CAPTION>

                                                                                        Cumulative
                                                      Unrealized        Foreign           Other
                                                      Gain/(Loss)       Currency       Comprehensive
    (dollars in thousands)                            on Securities    Translation        Income
    ------------------------------------------------------------------------------------------------
    <S>                                               <C>               <C>           <C>
    Balance,  January 1, 1999                         $   (320)         $    --       $   (320)
     Other comprehensive income                            253               --            253
     Tax benefit (expense)                                 (94)              --            (94)
                                                     -----------------------------------------------
    Balance, March 31, 1999                           $   (161)         $    --       $   (161)
                                                     ===============================================

    Balance, January 1, 2000                          $ (2,207)         $    46       $ (2,161)
          Other comprehensive income                     5,850             (283)         5,567
          Tax benefit (expense)                         (2,340)             113         (2,227)
                                                     -----------------------------------------------
    Balance, March 31, 2000                           $  1,303          $  (124)      $  1,179
                                                     ===============================================
</TABLE>

Note 6 - Segment Information
     The operations of the Company consist of two primary segments: Credit
Card and Emerging Businesses.  The Credit Card segment includes credit cards and
secured credit cards.  Credit Card customer  relationships are initiated through
direct  marketing  and other  distribution  channels  or credit  card  portfolio
acquisitions from other financial institutions.  The Emerging Businesses segment
represents  home loans,  First  Select,  which  specializes  in the  purchase of
delinquent loans for collection, and other new business initiatives.  Membership
services revenue, which is derived from both Credit Card and Emerging Businesses
customers, is included in the respective segment summary financial information.

     It is the  Company's  practice to analyze its  financial  performance  on a
managed basis.  Segment  information is presented below on the Company's managed
loan  portfolios.  The  Company  securitizes  certain  loans  and  records  such
securitizations  as sales,  which has the effect of removing such loans from the
Company's consolidated statements of financial condition.

     The following is a summary of the Company's  segment  activity on a managed
basis for the three months ended March 31, 2000 and 1999:

<TABLE>
<CAPTION>
                                               Credit         Emerging
    (dollars in thousands)                      Card         Businesses        Other        Total
    ------------------------------------------------------------------------------------------------
   <S>                                      <C>              <C>             <C>        <C>
   Three Months Ended March 31, 2000
      Revenue                               $  1,205,947        52,245        20,612    $  1,278,804
      Profit or loss                        $    399,682         3,071       (53,123)   $    349,630
      Assets                                $ 19,756,941     2,167,853       296,360    $ 22,221,154

   Three Months Ended March 31, 1999
      Revenue                               $    986,882        42,428           402    $  1,029,712
      Profit or loss                        $    231,092       (26,477)         (698)   $    203,917
      Assets                                $ 13,143,110     1,203,648            --    $ 14,346,758

</TABLE>

     The impact of securitizations on the Company's  consolidated  statements of
income is to reduce net interest income and the provision for credit losses, and
to increase  non-interest  income.  The  following  is a  reconciliation  of the
Company's segment activity on a managed basis to the consolidated  statements of
income of the Company for the periods ended March 31, 2000 and 1999:

<TABLE>
<CAPTION>
                                                                    Three Months Ended March 31
    (dollars in thousands)                                          2000                   1999
    ------------------------------------------------------------------------------------------------
    <S>                                                        <C>                  <C>
    Total segment profits                                      $    349,630         $    203,917
    Corporate and other                                             (59,133)             (14,725)
                                                              --------------------------------------
       Income before income taxes                              $    290,497         $    189,192
                                                              ======================================
</TABLE>
<PAGE>

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

Introduction
     Providian  Financial  Corporation  (the "Company") is a leading provider of
consumer  finance  products,  including credit cards,  deposits,  and membership
products.  The Company  through its  subsidiary,  GetSmart.com,  Inc.  offers an
online  marketplace  that  provides  consumer  and  business  financial  product
information and lender  connections  through  proprietary search and application
technology.  The  Company  offers its lending  and  deposit  products  primarily
through its banking subsidiaries,  Providian National Bank, a national bank, and
Providian Bank, a Utah industrial loan corporation.  The Company's  products are
offered to a broad  spectrum of consumers in the United States and in the United
Kingdom.  Credit  card  products  range from gold and  platinum  cards with high
credit lines to lower line  classic and secured  cards  designed  for  consumers
underserved by traditional financial institutions. The primary factors affecting
the  profitability of the Company's  consumer lending business are growth in the
number of customer  accounts and outstanding loan balances,  net interest spread
on loans, fee revenue,  credit usage,  credit quality  (delinquencies and credit
losses),  level of solicitation and marketing  expenses,  and account  servicing
efficiency.  The  Company's  market  focus  is to seek out  profitable  consumer
segments  and  apply its risk  adjusted,  return  driven  approach  to  customer
segmentation   and  pricing.   The  Company  believes  this  strategy  has  been
responsible for its continued overall superior financial performance.

     On February  29, 2000,  the Company  announced a  realignment  of resources
previously  dedicated to its home loan business.  The Company expects to utilize
these  resources,  including  employees and  facilities,  in its credit card and
e-commerce  businesses,  which are  experiencing  rapid  growth and have greater
potential  returns.  The Company  plans to provide  access to home loan products
online through its  GetSmart.com  Web site to new and existing  customers.  As a
result,  the  Company  will  refer  home  loans to  other  lenders  rather  than
originating  them. The Company does not expect this  realignment of resources to
have a material impact on its financial condition or results of operations.

Forward-Looking Information
     Certain  statements  contained  herein include  forward-looking  statements
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.  Forward-looking  statements
include   expressions  of  "belief,"   "anticipation,"   or   "expectations"  of
management,  statements as to industry trends or future results of operations of
the Company, and other statements which are not historical fact. Forward-looking
statements  are based on certain  assumptions  by management  and are subject to
risks and  uncertainties  that could cause actual  results to differ  materially
from those in the  forward-looking  statements.  These  risks and  uncertainties
include,  but are not limited to,  competition,  delinquencies,  credit  losses,
vendor   relationships,   funding  costs  and  availability,   general  economic
conditions,  government policy and regulations, risks related to growth, product
development,  acquisitions and operations, and litigation. These and other risks
and uncertainties are described in detail in the Company's 1999 Annual Report on
Form 10-K under the heading  "Cautionary  Statements," and in other filings made
by the  Company  with  the  Securities  and  Exchange  Commission.  Readers  are
cautioned not to place undue reliance on forward-looking statements, which speak
only as of the date hereof.  The Company  undertakes no obligation to update any
forward-looking statements.

Earnings Summary
     Net income for the three months ended March 31, 2000 was $174.3 million, an
increase  of 54% over net income of $113.5  million for the three  months  ended
March 31,  1999.  The key drivers to this first  quarter  performance  came from
growth in outstanding loan balances and customer accounts combined with improved
customer retention.

     As of March 31, 2000, managed loans, which include reported and securitized
loans,  were $22.1  billion,  an increase  of $1.1  billion,  or 5.1%,  over the
balance at December 31, 1999. This growth was achieved through  increases in the
Company's loan originations,  improved customer retention and increased purchase
activity from existing customers facilitated by the Company's ability to upgrade
proven customers to higher line products.

     The  Company's  managed net interest  margin on loans  remained  relatively
stable at 12.19% for the first  quarter of 2000  compared to 12.26% for the same
period in 1999.  The managed net credit loss rate for the first  quarter of 2000
decreased  to 7.18% from 7.62% for the same period in 1999;  however the managed
net credit loss rate is up from 6.78% for the fourth  quarter 1999. The increase
quarter over quarter  reflects account  seasoning within the managed  portfolio.
Consistent with the Company's expectations, the 30+ day managed delinquency rate
for the first  quarter  of 2000  increased  to 5.72%  from  5.66% for the fourth
quarter of 1999 and 4.91% for the first quarter of 1999. This account  seasoning
is  expected  to result in a continued  increase  in the  Company's  managed net
credit  loss  rate,  rising  to an 8%  range  by the  end of  2000.  The  dollar
contribution  to managed revenue from  non-interest  income in the first quarter
increased more than 56% over the same period in 1999 to $648.5  million,  due to
increased  revenue from membership  products and loan activity fees. The Company
reinvested a portion of the increased  managed  revenue to strengthen  loan loss
reserves,  increase marketing investment and build  infrastructure,  through the
expansion  of the employee  base and product  support  systems.  Year over year,
non-interest  expense increased $182 million during the first quarter of 2000 to
$499.1 million,  reflecting  expenses associated with servicing a greater number
of customers  and  maintaining  an employee base that has grown by 66% over that
period.

     The Company's  return on reported assets was 4.24% for the first quarter of
2000,  down from 5.78% for the same period in 1999.  This  decrease is primarily
the result of the Company's  decision to strengthen its balance sheet  liquidity
by  increasing  its  investment  security  portfolio.  The Company  continued to
maintain the overall  strength of its balance  sheet during the first quarter of
2000, with improved  earnings,  combined with a high level of capital retention.
This  provided a return on equity of 48.90%  for the first  quarter of 2000 down
only slightly from 52.19% for the same period in 1999.

Managed Consumer Loan Portfolio and the Impact of Securitization
     The Company  securitizes  credit  card,  home loan and secured  credit card
receivables.   For  additional   discussion  of  the  Company's   securitization
activities,  see "--Funding and Liquidity."  Securitized assets sold to external
investors are not  considered  assets of the Company and therefore are not shown
on the Company's consolidated statement of financial condition.  It is, however,
the Company's practice to analyze its financial  performance on a managed basis.
To perform this  analysis,  the Company uses an adjusted  income  statement  and
statement of financial condition,  which add back the effect of securitizations.
The following table summarizes the Company's managed loan portfolio:

<TABLE>
<CAPTION>
                                                                          Three Months Ended
                                                                               March 31
                                                                    --------------------------------
(dollars in thousands)                                                   2000             1999
----------------------------------------------------------------------------------------------------
<S>                                                                   <C>               <C>
Period-End Balances:
Reported consumer loans                                               $ 12,680,847      $ 6,857,160
Securitized consumer loans                                               9,427,700        7,483,655
                                                                    --------------------------------
    Total managed consumer loan portfolio                             $ 22,108,547     $ 14,340,815
                                                                    ================================

Average Balances:
Reported consumer loans                                               $ 12,196,433      $ 6,283,115
Securitized consumer loans                                               9,383,946        7,502,226
                                                                    --------------------------------
    Total average managed consumer loan portfolio                     $ 21,580,379     $ 13,785,341
                                                                    ================================

Operating Data and Ratios:
Reported:
       Average earning assets                                         $ 15,621,788      $ 7,232,188
       Return on average assets                                               4.24%            5.78%
       Net interest margin (1)                                               10.84%           11.68%
Managed:
       Average earning assets                                         $ 25,005,734     $ 14,734,414
       Return on average assets                                               2.71%            2.98%
       Net interest margin (1)                                               10.56%           11.81%

(1) Net  interest  margin is equal to net  interest  income  divided  by average
earning assets.
</TABLE>

Financial Statement Impact
     Securitizations  are treated as sales under GAAP. The Company  receives the
proceeds of the sale, and the  securitized  loans are removed from the Company's
consolidated  statements of financial  condition.  In certain cases, the Company
has  retained  a  subordinated  interest  in the pool of  assets  included  in a
securitization,   with  a  right  to  receive  collections   allocated  to  such
subordinated  interest after payment to investors.  Such retained  interests are
recorded  at fair value and are  included  in "Due from  securitization"  on the
Company's consolidated  statements of financial condition. At the time it enters
into  a  securitization,   the  Company   recognizes  an  "interest-only   strip
receivable"  asset, which is the present value of the projected excess servicing
income during the period the securitized  loans are projected to be outstanding.
"Excess  servicing  income"  refers to the excess of the finance  charge and fee
revenue  generated by the securitized loans over the sum of the interest paid to
investors,   related  credit  losses,  servicing  fees,  and  other  transaction
expenses.  During  the  revolving  period  of a  securitization,  an  additional
interest-only   strip   receivable  is  recognized  each  month,  as  additional
receivables  are generated in the accounts that are in the  securitized  pool to
replenish  the  investors'  share of principal  collections  on the  securitized
loans.  Revenue  resulting from excess servicing income is recognized each month
first as a reduction of the  interest-only  strips  receivable  and then, to the
extent the amount received  exceeds the related  component of the  interest-only
strips receivable, as servicing and securitization income.

     When loans are  securitized,  the  Company  retains a  "seller's  interest"
generally  equal to the  total  amount  of the pool of  assets  included  in the
securitization less the investors' portion of those assets. As the amount of the
loans in the securitized  pool fluctuates due to customer  payments,  purchases,
cash advances, and credit losses, the amount of the seller's interest will vary.
The seller's interest is classified on the Company's consolidated  statements of
financial condition as loans receivable at par less the associated allowance for
credit losses.  Periodically,  the Company transfers new loans receivable into a
securitized pool in order to maintain the seller's interest above an agreed-upon
minimum.

     The Company  services the accounts  underlying  the  securitized  loans and
earns a monthly  servicing fee, which is generally offset by the servicing costs
incurred by the Company. Accordingly,  servicing assets have not been recognized
in connection with the Company's securitizations.

     The  effect of  securitization  accounting  on the  Company's  consolidated
statements  of income is to reduce net  interest  income and the  provision  for
credit losses, and to increase  non-interest  income. For the three months ended
March 31, 2000 and 1999  securitization  accounting had the effect of:  reducing
net interest income by $237.0 million and $223.8 million; reducing the provision
for  credit  losses  by  $158.0  million  and  $162.8  million;  and  increasing
non-interest income by $79.0 million and $61.0 million. Because credit losses on
the   securitized   loans  are   reflected  as  a  reduction  in  servicing  and
securitization  income  rather  than a  reduction  of the  allowance  for credit
losses,  the  Company's  provision  for credit losses is lower than would be the
case had such loans not been securitized.

Risk Adjusted Revenue and Return
     One measure of product profitability that incorporates revenue and the most
significant  costs  inherent in  consumer  loan risk  analysis is risk  adjusted
revenue, which is net interest income on loans plus non-interest income less net
credit  losses.  The  Company  uses risk  adjusted  revenue as a measure of loan
portfolio  profitability,  consistent with its goal of matching the revenue base
of customer accounts with the risk undertaken. Risk adjusted revenue may also be
expressed  as a  percentage  of  average  consumer  loans,  in which  case it is
referred to as risk adjusted return.

     Managed risk  adjusted  revenue and return for the three months ended March
31, 2000 were $918.7  million and 17.03%,  compared to $576.0 million and 16.72%
for the same period in 1999.  The increase in managed risk adjusted  revenue and
return  reflects a decrease in managed  net credit loss rates,  which were 7.18%
for the three  months  ended March 31,  2000,  compared to 7.62% for the quarter
ended March 31, 1999,  reflecting  strong asset growth and declining credit loss
rates on high line portfolios.

     The  components  of risk  adjusted  revenue are discussed in more detail in
subsequent  sections of this  Management's  Discussion and Analysis of Financial
Condition and Results of Operations.

Net Interest Income and Margin
     Net interest income is interest earned from loan and investment  portfolios
less interest  expense on deposits and  borrowings.  Managed net interest income
includes net  interest  income and interest  earned from  securitized  loans and
spread accounts less interest paid to securitization investors.

     Managed net  interest  income for the three months ended March 31, 2000 was
$660.3  million,  compared  to  $434.9  million  for the  same  period  in 1999,
representing an increase of $225.4 million,  or 52%. Managed net interest margin
on average managed earning assets decreased to 10.56% for the three months ended
March 31,  2000,  from 11.81% for the same period in 1999.  The decrease was the
result of the Company's decision to increase liquidity  utilizing its investment
portfolio.  Managed  net  interest  margin on average  managed  loans  decreased
slightly to 12.19% for the three months  ended March 31,  2000,  from 12.26% for
the same period in 1999.  The  decrease in managed net  interest  margin was the
result of increased borrowing rates for the Company being  substantially  offset
by increases in finance charge  yields.  During the course of the past year, the
federal  funds rate has been  increased  125 basis  points.  The higher  finance
charge yields  resulted from an increase in the number of lower line credit card
accounts,  which generate  higher  overall  finance charge rates and fee income,
consistent with the Company's risk adjusted approach to pricing.

Statement of Average Balances, Income and Expense, Yields and Rates
     The  following  table  provides an analysis  of reported  interest  income,
interest expense, net interest spread, and average balances for the three months
ended March 31, 2000 and 1999.  Interest income and interest expense margins are
presented  as  a  percentage   of  average   earning   assets,   which   include
interest-earning  consumer loan  portfolios and  investments  held for liquidity
purposes.

<TABLE>
<CAPTION>

                                                                Three Months Ended March 31
                                     -------------------------------------------------------------------------------
                                                        2000                                   1999
                                     --------------------------------------  ---------------------------------------
                                        Average       Income/      Yield/       Average       Income/      Yield/
(dollars in thousands)                  Balance       Expense       Rate        Balance       Expense       Rate
--------------------------------------------------------------------------------------------------------------------
<S>                                   <C>             <C>           <C>          <C>            <C>          <C>
ASSETS:
Interest-earning assets
     Consumer loans                   $ 12,196,433    $ 576,726     18.91%       6,283,115      279,125      17.77%
     Interest-earning cash                 127,871        1,809      5.66%          95,724        1,171       4.89%
     Federal funds sold                  2,192,817       31,735      5.79%         479,005        5,704       4.76%
     Investment securities               1,104,667       17,629      6.38%         374,344        5,616       6.00%
                                     -------------------------------------------------------------------------------
Total interest-earning assets           15,621,788    $ 627,899     16.08%       7,232,188    $ 291,616      16.13%

Allowance for loan losses               (1,101,701)                               (506,711)
Other assets                             1,921,220                               1,128,962
                                     --------------                          --------------
Total assets                          $ 16,441,307                             $ 7,854,439
                                     ==============                          ==============


LIABILITIES AND EQUITY:
Interest-bearing liabilities
     Deposits                         $ 12,337,384      185,887      6.03%       4,928,978       64,439       5.23%
     Borrowings                          1,155,204       18,771      6.50%       1,061,815       16,062       6.05%
                                     -------------------------------------------------------------------------------
Total interest-bearing liabilities      13,492,588    $ 204,658      6.07%       5,990,793     $ 80,501       5.37%

Other liabilities                        1,362,668                                 833,356
                                     --------------                          --------------
Total liabilities                       14,855,256                               6,824,149

Capital securities                         160,000                                 160,000

Equity                                   1,426,051                                 870,290
                                     --------------                          --------------
Total liabilities and equity          $ 16,441,307                             $ 7,854,439
                                     ==============                          ==============

NET INTEREST SPREAD:                                                10.01%                                   10.76%
                                                                  =========                               ==========

Interest income to
     average interest-earning assets                                16.08%                                   16.13%
Interest expense to
     average interest-earning assets                                 5.24%                                    4.45%
                                                                  ---------                               ----------
Net interest margin                                                 10.84%                                   11.68%
                                                                  =========                               ==========
</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. Net interest income is also affected by changes in
the volume of  interest-earning  assets and  interest-bearing  liabilities.  The
following  table sets  forth the dollar  amount of the  increase  (decrease)  in
interest  income and interest  expense  resulting from changes in the volume and
rates:

<TABLE>
<CAPTION>
                                                                Three Months Ended March 31
                                                                       2000 vs. 1999
                                                        --------------------------------------------
                                                          Increase           Change due to (1)
                                                                        ----------------------------
     (dollars in thousands)                              (Decrease)        Volume          Rate
     -----------------------------------------------------------------------------------------------
     <S>                                                  <C>            <C>             <C>
     Interest Income:
     Consumer loans                                       $ 297,601      $ 278,609       $ 18,992
     Federal funds sold                                      26,031         24,547          1,484
     Other securities                                        12,651         12,070            581
                                                         --------------------------------------------
         Total interest income                              336,283        315,226         21,057

     Interest Expense:
     Deposits                                               121,448        110,230         11,218
     Borrowings                                               2,709          1,468          1,241
                                                        --------------------------------------------
         Total interest expense                             124,157        111,698         12,459
                                                        --------------------------------------------
         Net interest income                              $ 212,126      $ 203,528       $  8,598
                                                        ============================================

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

Non-Interest Income
     Non-interest   income,   which   consists   primarily  of   servicing   and
securitization income and credit product fee income,  represented  approximately
54% of gross reported  revenues for the three months ended March 31, 2000. Total
non-interest  income increased  52.4%, or $250.3 million,  to $727.5 million for
the three months ended March 31, 2000,  compared to $477.3  million for the same
period in 1999.  This  increase is primarily  attributable  to increased  credit
product fee income realized from membership  services  revenue and loan activity
fees resulting from an increased customer base.

Servicing and Securitization Income
     Servicing and securitization  income relates directly to securitized loans.
It includes a servicing  fee,  which  generally  offsets the  Company's  cost of
servicing the securitized  loans,  excess servicing income,  and gains or losses
from the transfer of financial  assets (see  "--Managed  Consumer Loan Portfolio
and the  Impact of  Securitization").  To the extent  subsequent  cash flows for
excess  servicing  income exceed the projected  amounts,  which were recorded at
present   value,   the  Company  will   recognize   additional   servicing   and
securitization income during the period in which the servicing is provided.

     As of March 31, 2000, securitizations  outstanding provided $9.7 billion in
funding,  representing 38% of total managed funding, compared with $7.4 billion,
or 46%, as of March 31, 1999. The decrease in  securitizations  outstanding as a
percentage  of  total  managed  funding  as of  March  31,  2000  was due to the
Company's efforts to diversify its funding sources and increase deposit funding.
A more  detailed  discussion of the  Company's  funding  sources and the role of
securitization activities is set forth under "--Funding and Liquidity."

     Because excess servicing income on securitized loans essentially represents
a  recharacterization  of net interest income and credit product fee income less
the provision for loan losses and servicing expense, it will vary based upon the
same factors that affect those items.  Thus,  changes in net credit  losses (see
"--Asset  Quality,  Net Credit  Losses")  and changes in interest  rates (to the
extent that the  receivables  and interest  payable to investors  are based upon
floating   rates)   will   cause   excess   servicing   income   to  vary   (see
"--Asset/Liability Risk Management").

     For the three  months ended March 31, 2000,  servicing  and  securitization
income  increased $22.9 million from the same period in 1999, to $154.1 million.
Excess servicing  yields on securitized  loans improved for the first quarter of
2000 due to  decreases in net credit loss rates which were  partially  offset by
decreased finance charge and fee yields on securitized loans.

Credit Product Fee Income
     Credit  product fee income  includes loan activity fees,  loan  performance
fees,  and  membership  services  revenue.  For the three months ended March 31,
2000,  credit product fee income increased 59.9% to $546.4 million,  compared to
$341.8 million for the same period in 1999.  The Company  expects credit product
fee income  growth to  moderate  in 2000.  Certain  fee  revenue  realized  from
securitized  loans is not  included in credit  product fee income but instead is
recorded as part of servicing and securitization income.

     Strong  growth  in  new  customers,  customers  that  purchased  membership
products,  and rising loan  activity fee volume  contributed  to the increase in
credit product fee income during the quarter ended March 31, 2000 over the first
quarter  of 1999.  For the three  months  ended  March 31,  2000 and 1999,  loan
activity  fees,  which  include  interchange  income  and cash  advance,  annual
membership, and processing fees, totaled $242.7 million and $152.0 million. Loan
activity fee income  increased as account  growth  resulted in increased  annual
membership  fees, cash advance fees, and interchange  income.  Loan  performance
fees include late fees,  returned  check fees,  and overlimit  charges.  For the
three months ended March 31, 2000 and 1999, loan performance fees totaled $106.6
million and $95.8 million, reflecting increased overlimit income consistent with
growth in the  account  base  offset in part by a decrease  in late fee  income.
Membership   services  revenue  results  primarily  from  the  sale  of  various
proprietary  membership  products that complement the Company's credit products.
The Company recognizes  membership services revenue ratably over the term of the
product,  net of an allowance for estimated refunds,  beginning after the end of
the free or  money-back  guarantee  period,  if any.  For the three months ended
March 31, 2000 and 1999,  membership services revenue totaled $197.1 million and
$94.0  million.  The  increase  reflects the overall  increase in the  Company's
customer base and increased sales of membership products to existing customers.

Non-Interest Expense
     Non-interest   expense  includes  employee  salaries  and  benefits;   loan
solicitation and advertising costs; occupancy,  furniture,  and equipment costs;
data processing and communication  costs; and other non-interest  expense.  Loan
solicitation and advertising  costs include  printing,  postage,  telemarketing,
list  processing,  and credit  bureau costs paid to third  parties in connection
with account solicitation  efforts. The Company also incurs advertising costs to
promote its consumer  financial  products.  In accordance with GAAP, the Company
has capitalized only the direct  nonsolicitation  costs (loan origination costs)
associated  with  successful  account  acquisition  efforts,   after  offsetting
up-front processing fees.  Capitalized loan origination costs are amortized over
the privilege period (currently one year) for credit card loans or the estimated
life of the loans for home  loans,  unless the loans are  securitized,  in which
case the costs are taken as an expense prior to the securitization. The majority
of loan origination  costs are expensed as incurred.  For the three months ended
March 31, 2000 and 1999, the Company  amortized loan  origination  costs of $7.4
million and $11.2  million.  For the three months ended March 31, 2000 and 1999,
total loan solicitation costs,  including amortized loan origination costs, were
$112.1  million  and $99.4  million.  The  increase in loan  solicitation  costs
reflects  new  marketing   initiatives,   including   television   and  Internet
advertising campaigns.

     Non-interest  expense also includes  salary and benefit  expenses,  such as
staffing costs associated with marketing,  customer  service,  collections,  and
administration.  Other non-interest expense includes third-party data processing
and communication  costs,  occupancy expenses,  and other operational  expenses,
such as collection costs,  fraud losses, and bankcard  association  assessments.
The following  table  presents  non-interest  expense for the three months ended
March 31, 2000 and 1999:

<TABLE>
<CAPTION>

                                                                    Three Months Ended March 31
                                                               -------------------------------------
    (dollars in thousands)                                          2000                   1999
    ------------------------------------------------------------------------------------------------
    <S>                                                         <C>                  <C>
    Non-interest expense
    Salaries and employee benefits                             $    174,980         $     95,987
    Solicitation and advertising                                    112,122               99,447
    Occupancy, furniture, and equipment                              30,599               15,304
    Data processing and communication                                40,618               24,762
    Other                                                           140,752               81,606
                                                               -------------------------------------
           Total                                               $    499,071         $    317,106
                                                               =====================================
</TABLE>

Impact of Year 2000
     The Company has not experienced  any material  disruption in its operations
as a result  of the Year 2000  date  rollover.  Monitoring  and  validation  are
scheduled  to  continue  through  the end of 2000 to verify that all systems and
applications continue to function properly.

     The Company  incurred $13.8 million in Year 2000 project  expenses  through
March 31,  2000.  The Company  has funded all Year  2000-related  costs  through
operating cash flows.  Year 2000 costs have been expensed as incurred,  and such
costs  have not had a  material  impact on the  Company's  financial  results or
condition.

Income Taxes
     The  Company  recognized  income tax  expense of $116.2  million  and $75.6
million  for the three  months  ended  March 31,  2000 and 1999.  The  Company's
effective tax rate was 40.0% for the three months ended March 31, 2000 and 1999.

Asset Quality
     The  Company's  delinquencies  and net credit losses  reflect,  among other
factors, the quality of loans, the average age of the Company's loans receivable
(generally referred to as "seasoning"),  the success of the Company's collection
efforts, and general economic conditions. The quality of loans is subject to the
segmentation and underwriting criteria used, account management,  seasoning, and
demographic and other factors.

     The level of net credit losses directly  affects earnings when reserves are
established through recognition of provisions for credit losses.  Provisions for
credit losses  generally  depend on  historical  levels of net credit losses and
current trends.  As new portfolios of consumer loans are originated or acquired,
management uses historical credit loss and delinquency analyses of similar, more
seasoned loan portfolios and other qualitative factors to establish an allowance
for credit  losses  inherent in the existing  portfolio  (see  "--Allowance  and
Provision  for Credit  Losses").  As net  credit  losses  are  experienced,  the
previously   established   reserve  is  used  to  absorb   the  credit   losses.
Additionally, the Company adjusts the allowance for credit losses to reflect the
sale of securitized loans and the removal of the related net book value from the
consolidated statements of financial condition.

     The  Company's  policy  is to  recognize  principal  credit  losses  on all
delinquent  unsecured  loans  (including the unsecured  portion of any partially
secured credit card loans) no more than 180 days after the  delinquency  occurs,
unless the  accountholder  cures the  default by making a partial  payment  that
qualifies  under the  Company's  standards.  Accounts  of  bankrupt  credit card
customers are charged off upon notification of bankruptcy.  Accounts of deceased
credit card customers are charged off upon determination of uncollectibility but
in no case later than 180 days after such loans  become  delinquent.  Home loans
are reviewed when a loss of all or part of the principal  balance of the loan is
anticipated,  and an allowance for credit losses is established in the amount by
which the book value of the loan exceeds the estimated net  realizable  value of
the underlying  collateral.  Anticipated losses on home loans are charged off no
later than 180 days after payments on such loans become delinquent.  At the time
a loan is  charged  off,  accrued  but unpaid  finance  charge and fee income is
reversed against current earnings but is maintained on the customer's  record in
the  event  of a future  recovery.  After a loan is  charged  off,  the  Company
continues   collection  activity,   to  the  extent  legally  permissible.   Any
collections on previously  charged off loans are  recognized as recoveries  when
realized.

Delinquencies
     The  following  table  presents  the  delinquency  trends of the  Company's
reported and managed  consumer loan portfolios as of March 31, 2000 and 1999. An
account is  contractually  delinquent if the minimum  payment is not received by
the next billing date. Total 30+ day delinquencies on managed loans increased to
5.72% as of March 31,  2000 from 5.66% as of  December  31, 1999 and 4.91% as of
March 31, 1999. This increase  reflects the overall change in the loan portfolio
composition and account seasoning in lower line credit card asset classes.

<TABLE>
<CAPTION>
                                                              March 31
                                --------------------------------------------------------------------
                                           2000                                    1999
                                --------------------------------------------------------------------
                                                      % of                                   % of
                                                      Total                                  Total
     (dollars in thousands)        Loans              Loans               Loans              Loans
     -----------------------------------------------------------------------------------------------
     <S>                             <C>                  <C>               <C>                  <C>
     Reported:
     Loans outstanding           $ 12,680,847         100.00%           $ 6,857,160          100.00%
     Loans delinquent:
        30 - 59 days                  248,800           1.96%               108,549            1.58%
        60 - 89 days                  203,678           1.61%                83,352            1.22%
        90 or more days               440,397           3.47%               176,615            2.57%
                             -------------------------------------------------------------------------
        Total                    $    892,875           7.04%           $   368,516            5.37%
                             =========================================================================
     Managed:
     Loans outstanding           $ 22,108,547         100.00%           $14,340,815          100.00%
     Loans delinquent:
        30 - 59 days                  375,875           1.70%               224,887            1.57%
        60 - 89 days                  288,082           1.30%               158,902            1.11%
        90 or more days               601,185           2.72%               320,885            2.23%
                             -------------------------------------------------------------------------
        Total                    $  1,265,142           5.72%           $   704,674            4.91%
                             =========================================================================

</TABLE>

Net Credit Losses
     Net credit losses for consumer  loans  represent  the  principal  amount of
losses from customers who have not paid their existing loan balances  (including
charged-off  bankrupt  and  deceased  customer  accounts)  less  current  period
recoveries.  The  principal  amounts  of  such  losses  include  cash  advances,
purchases,  and certain financed membership product sales. The principal amounts
of such losses exclude  accrued  finance  charge and other fee income,  which is
charged  against  the  related  income at the time of credit  loss  recognition.
Losses for cardholder  accounts  related to fraudulent  activity are included in
other non-interest expense.

     The annualized  managed net credit loss rate decreased to 7.18% as of March
31, 2000,  compared to 7.62% as of March 31, 1999,  reflecting  asset growth and
improved  credit loss rates on the Company's  higher line  portfolios  partially
offset by increased  credit loss rates on the  Company's  lower line credit card
portfolios. The continued seasoning of the Company's lower line asset classes is
expected  to result in an  increase  in the  managed net credit loss rate during
subsequent  quarters.  The Company's  pricing for finance  charge and fee income
incorporates  an expected higher credit loss rate when  appropriate,  consistent
with the Company's risk adjusted return approach.

     The following  table  presents the Company's net credit losses for consumer
loans for the periods  indicated and is presented both on a financial  statement
reporting basis and a managed portfolio basis:

<TABLE>
<CAPTION>

                                                                        Three Months Ended
                                                                              March 31
                                                               -------------------------------------
    (dollars in thousands)                                          2000                   1999
    ------------------------------------------------------------------------------------------------
    <S>                                                        <C>                  <C>
    Reported:
    Average loans outstanding                                  $ 12,196,433         $  6,283,115
    Net credit losses                                          $    229,219         $     99,973
    Net credit losses as a percentage
       of average loans outstanding                                    7.52%                6.36%

    Managed:
    Average loans outstanding                                  $ 21,580,379         $ 13,785,341
    Net credit losses                                          $    387,267         $    262,759
    Net credit losses as a percentage
       of average loans outstanding                                    7.18%                7.62%
</TABLE>

Allowance and Provision for Credit Losses
     The Company  maintains the allowance for credit losses at a level estimated
to be adequate  to absorb  credit  losses,  net of  recoveries,  inherent in the
existing reported loan portfolio.  The allowance for credit losses is maintained
for reported loans only (see  "--Managed  Consumer Loan Portfolio and the Impact
of  Securitization").   Accordingly,   the  entire  allowance  is  allocated  to
designated portfolios or pools of the Company's reported loans.

     As part of the quantitative  evaluation of the allowance for credit losses,
the Company  segregates  loans by portfolio  type.  These include  portfolios of
various  types  of  credit  card  and  home  loan  products  and  acquired  loan
portfolios.   The   quantitative   factors   the  Company   uses  to   establish
portfolio-level  reserves are historical  delinquencies,  historical credit loss
rates, level of security (if applicable),  customer  characteristics,  and other
factors.  Home  loans  that are 90 or more  days  past  due are  also  evaluated
individually  for  collectibility  in order to establish an allowance for credit
losses.  Loan  portfolios are grouped into credit card and home loan pools,  and
certain  qualitative  factors  are  applied  to  those  pools,  consistent  with
applicable  bank  regulatory  guidelines.  In  evaluating  the need to establish
additional   allowances  on  a  pool  or  portfolio,   the  Company  takes  into
consideration qualitative factors, including general economic conditions, trends
in loan portfolio volume and seasoning,  geographic  concentrations,  and recent
modifications to loan review and underwriting  procedures.  The Company compares
actual credit loss performance  against estimated credit losses,  and may modify
its loan loss allowance evaluation model accordingly.

     The  following  table sets forth the activity in the  allowance  for credit
losses for the three months ended March 31, 2000 and 1999:

<TABLE>
<CAPTION>
                                                                        Three Months Ended
                                                                              March 31
                                                               -------------------------------------
    (dollars in thousands)                                          2000                   1999
    -----------------------------------------------------------------------------------------------
    <S>                                                        <C>                  <C>
    Balance at beginning of period                             $  1,028,377         $    451,245
    Provision for credit losses                                     361,213              182,073
    Allowance acquired                                                    -               14,310
    Foreign currency translation                                        (11)                   -
    Credit losses                                                  (255,082)            (115,506)
    Recoveries                                                       25,863               15,533
                                                                -------------------------------------
    Net credit losses                                              (229,219)             (99,973)
                                                                -------------------------------------
    Balance at end of period                                   $  1,160,360         $    547,655
                                                                =====================================

    Allowance for credit losses to loans at period-end                 9.15%                7.99%
</TABLE>

The  allowance  for credit  losses  increased to $1,160.4  million,  or 9.15% of
reported  loans,  as of March 31,  2000,  from  $1,028.4  million,  or 8.86 % of
reported loans, as of December 31, 1999 and $547.7 million, or 7.99% of reported
loans,  as of March 31, 1999. The increase in the allowance for credit losses as
a percentage  of reported  loans  reflects an increase in lower line credit card
loans,  which are generally expected to experience higher credit loss rates (see
"--Risk Adjusted Revenue and Return").

Funding and Liquidity
     The Company funds its assets through a diversified mix of funding  products
designed to appeal to a broad range of  investors,  with the goal of  generating
funding at the lowest  cost  possible  while  maintaining  liquidity  at prudent
levels and managing interest rate risk.

     The primary goal of the  Company's  liquidity  management is to ensure that
funding will be  available to support  Company  operations  in varying  business
environments.  The  Company  employs  multiple  strategies  to maintain a strong
liquidity position,  including diversification of funding sources, dispersion of
maturities, maintenance of a prudent investment portfolio and cash balances, and
maintenance of committed credit facilities.

Funding Sources and Maturities
     The  Company  seeks to fund its  assets by  diversifying  its  distribution
channels and offering a variety of funding products.  Among the products offered
are retail and  institutional  deposits,  money  market  accounts,  term federal
funds, public and private asset  securitizations,  and bank notes.  Distribution
channels  include  direct  phone  and mail,  brokerage  and  investment  banking
relationships, and the Internet.

     The Company offers maturity terms for its funding  products that range from
one week to 30 years. Actual maturity  distributions  depend on several factors,
including expected asset duration, investor demand, relative costs, shape of the
yield curve, and anticipated issuance in the securitization and capital markets.
Maturities are managed by the types of funding sources utilized and by the rates
offered  on  different  products.  The  Company  seeks to  maintain  a  balanced
distribution of maturities,  avoiding undue concentration in any one period. The
Company monitors  existing funding  maturities and loan growth  projections with
the goal of ensuring that liquidity levels are adequate to support maturities.

     The following table  summarizes the  contractual  maturities of deposits at
the Company as of March 31, 2000 and December 31, 1999:

<TABLE>
<CAPTION>
                                                         March 31, 2000                                December 31, 1999
                                           -----------------------------------------------------------------------------------------
                                              Direct         Other          Total            Direct         Other          Total
(dollars in thousands)                       Deposits       Deposits       Deposits         Deposits       Deposits       Deposits
------------------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>            <C>           <C>               <C>            <C>           <C>
Three months or less                        $  735,834     $  309,356    $ 1,045,190       $  675,158     $  271,852    $   947,010
Over three months through 12 months          2,124,962      2,894,045      5,019,007        2,080,048      2,084,568      4,164,616
Over one year through five years             1,941,346      3,663,269      5,604,615        1,426,006      2,609,582      4,035,588
Over five years                                      -        429,448        429,448                -        330,000        330,000
Deposits without contractual maturity          978,031         45,539      1,023,570          999,753         61,156      1,060,909
                                           -----------------------------------------------------------------------------------------
     Total deposits                         $5,780,173     $7,341,657    $13,121,830       $5,180,965     $5,357,158    $10,538,123
                                           =========================================================================================
</TABLE>

Deposits  increased to $13.1  billion as of March 31, 2000 from $10.5 billion as
of December 31, 1999. This increase is attributable to the Company's  continuing
strategy  to  maintain  a large  deposit  funding  base and  strong  demand  for
FDIC-insured deposits.

     The Company  securitizes loans in order to diversify funding sources and to
obtain an efficient  all-in cost of funds,  including  the cost of capital.  The
securitizations  are  diversified  across the public and private  securitization
markets and across maturity terms.  Pools of securitized loans provide cash flow
for securities sold to investors under legal  structures that generally  provide
for an interest-only  (revolving) period and a principal repayment (amortization
or accumulation) period. During an amortization or accumulation period, payments
on the  securitized  loans are  distributed  or  accumulated  for payment to the
securitization  investors,  and the  portion of the  securitized  pool of assets
reported on the Company's statement of financial condition will increase.

     Private  securitizations  generally utilize commercial  paper-based conduit
facilities and other variable funding  programs to securitize loans  receivable.
The conduit  facilities and variable  funding  programs are generally  renewable
annually.  Balances  securitized  under conduit and variable funding  facilities
totaled approximately $3.1 billion as of March 31, 2000.

     During the first  three  months of 2000,  the  Company  completed  one term
securitization totaling approximately $525 million.

     The  Company's  term  securitizations  are  expected to  amortize  over the
periods indicated below, based on currently outstanding  securitized loans as of
March 31, 2000:

                                                                   Amount
                                                               Amortizing
    Year                                             (dollars in millions)
    ----------------------------------------------------------------------
    2000                                                           $  410
    2001                                                            1,130
    2002                                                            1,783
    2003                                                            1,612
    2004                                                              961
    2005                                                               89

The Company  believes  that it can  attract  deposits,  borrow  funds from other
sources,  and issue  additional  asset-backed  securities to replace the funding
reflected in the amortization  schedule summarized above, although no assurances
can be given to that effect.

     The Company,  through one of its banking subsidiaries,  maintains a program
for the  issuance  of senior  and  subordinated  debt  instruments.  Under  this
program,  the Company  from time to time may issue  fixed or variable  rate debt
instruments  in the  aggregate  principal  amount  of up to $4.0  billion,  with
maturities ranging from seven days to 15 years.

     The following table shows the Company's unsecured funding  availability and
outstandings as of March 31, 2000:

<TABLE>
<CAPTION>
                                                                               March 31, 2000
                                                        -------------------------------------------------------------
                                                         Effective/                       Outstanding,       Final
(dollars or dollar equivalents in thousands)             Issue Date    Availability (1)       Net           Maturity
---------------------------------------------------------------------------------------------------------------------
<S>                                                        <C>           <C>               <C>               <C>
Senior and subordinated bank note program (2)(3)              2/98       $ 4,000,000       $ 899,836             2/13
Short-term credit facilities (three 364-day facilities)    Various           250,000              --          Various
Short-term U.K. credit facility (364-day facility)(4)         4/99            39,883          15,953             4/01
Revolving credit facility                                     1/99           750,000              --             1/03
Providian Financial shelf registration                        6/98         2,000,000              --               --
Capital Securities                                            2/97           160,000         160,000             2/27

</TABLE>

(1)  Short-term bank notes issued under the bank note program and short-term and
     long-term  credit  facilities  are  revolving   funding  sources.   Funding
     availability is subject to market conditions and contractual provisions.
(2)  Includes  availability  to issue up to $500  million of  subordinated  bank
     notes, none outstanding as of March 31, 2000.
(3)  Bank  notes  currently   outstanding   under  the  bank  note  program  are
     medium-term senior bank notes.
(4)  (pound)25  million  sterling  facility in dollars using exchange rate as of
     March 31, 2000.

Investments
     The  Company  maintains  cash  reserves  to  provide  adequate   short-term
liquidity.  The Company also  maintains a portfolio of  high-quality  investment
securities  such as U.S.  government  and  agency  obligations,  mortgage-backed
securities,  commercial  paper,  interest-earning  deposits  with  other  banks,
federal funds sold, and other cash equivalents.  Investment securities increased
to $2,390.5  million as of March 31, 2000 from $581.5 million as of December 31,
1999, due to steps taken to enhance the Company's  liquidity  position,  funding
opportunistically at attractive rates in the deposit market.  Federal funds sold
and securities purchased under resale agreements decreased to $1.2 billion as of
March 31, 2000 from $1.3 billion as of December 31, 1999.

Credit Facilities
     The Company has additional  backup  liquidity in the form of a $750 million
(reduced  from  $1.0  billion  as of  December  31,  1999)  unsecured  committed
revolving  credit  facility  from a group of  financial  institutions,  which is
scheduled  to expire in January  2003.  Pursuant  to this credit  facility,  the
Company's two banking subsidiaries,  Providian National Bank and Providian Bank,
as borrowers,  have access to revolving loans, which bear interest determined by
a  competitive  bid  process  or based on the  federal  funds  rate,  the London
Interbank  Offered Rate (LIBOR),  or the prime rate, plus a spread.  The Company
guarantees  the  prompt  and  complete  payment,  when  due,  of the  borrowers'
obligations  under the credit facility.  During the first quarter of 2000, there
were no  borrowings  under the credit  facility.  The Company is also a party to
three  separate  364-day  lines of credit  totaling  $250  million,  under which
short-term borrowings are available for general corporate purposes.  The Company
did not  borrow  funds  under  these  364-day  lines of credit  during the first
quarter of 2000. The United Kingdom branch of Providian National Bank is a party
to a sterling  denominated  364-day  line of credit in the  amount of  (pound)25
million ($39.9 million equivalent based on the exchange rate at March 31, 2000),
under which short-term  borrowings are available for general corporate purposes.
The  Company  guarantees  the  prompt and  complete  payment,  when due,  of the
borrower's obligations under the sterling facility.

     The Company  follows a  contingency  funding  plan that  defines  tests for
management  to  monitor  the  Company's   liquidity   position  and   prescribes
management's actions in response to various circumstances.

Capital Adequacy
     Each of the Company's  banking  subsidiaries is subject to capital adequacy
guidelines as defined by its primary  federal  regulator.  Core capital (Tier 1)
consists  principally of  shareholders'  equity less goodwill.  Total risk-based
capital  (Tier 1 + Tier 2) includes a portion of the  reserve for credit  losses
and other capital  components.  Based on these  classifications of capital,  the
capital  adequacy  regulations  establish three capital adequacy ratios that are
used to  measure  whether  a  financial  institution  is "well  capitalized"  or
"adequately capitalized":

<TABLE>
<CAPTION>
                                                                             Well           Adequately
                                                                         Capitalized       Capitalized
       Capital Ratio                      Calculation                       Ratios            Ratios
    ----------------------------------------------------------------------------------------------------
    <S>                    <C>                                               <C>            <C>
    Total risk-based       (Tier 1 + Tier 2)/Total risk-based assets         => 10%         => 8% < 10%
    Tier 1                 Tier 1/Total risk-based assets                    =>  6%         => 4% <  6%
    Leverage               Tier 1/Adjusted average assets                    =>  5%         => 4% <  5%

</TABLE>

     At March 31, 2000,  each of the Company's  banking  subsidiaries  was "well
capitalized" in all regulatory capital ratio categories, as set forth below:

<TABLE>
<CAPTION>
                                                                           Providian
                                                                            National         Providian
    Capital Ratio                                                             Bank              Bank
    ----------------------------------------------------------------------------------------------------
    <S>                                                                      <C>               <C>
    Total risk-based                                                         10.42%            15.06%
    Tier 1                                                                    9.06%            13.76%
    Leverage                                                                  9.51%             6.36%
</TABLE>

The Company's banking subsidiaries' capital amounts and classifications are also
subject to qualitative  judgments by the regulators  with respect to components,
risk weightings, and other factors.

Asset/Liability Risk Management
     The  composition  of the  Company's  consolidated  statements  of financial
condition  consist  primarily of investments in  interest-earning  assets (loans
receivable   and   investment   securities)   that  are   primarily   funded  by
interest-bearing  liabilities  (deposits  and  borrowings).  As  a  result,  the
Company's earnings are subject to risk resulting from interest rate fluctuations
to the extent that there is a difference between the amount of  interest-earning
assets and the amount of interest-bearing  liabilities that mature,  reprice, or
prepay/withdraw in a specific period.

     The Company's receivables generally have a fixed yield or float at a spread
above the prime rate.  While the  Company's  fixed rate credit card  receivables
have no stated  maturity or  repricing  period,  the Company may adjust the rate
charged after providing notice to the customer.  Interest rates on the Company's
liabilities are generally  indexed to LIBOR or bear a fixed rate until maturity.
This asset/liability structure exposes the Company to two types of interest rate
risk: (a) repricing risk, which results from  differences  between the timing of
rate changes and the timing of cash flows; and (b) basis risk, which arises from
changing spread relationships between yield curves and indexes.

     The principal  objective of the Company's  asset/liability  risk management
activities is to monitor and control the Company's  exposure to adverse  effects
resulting from  movements of interest rates over time. The Company  measures and
manages  interest rate risk  individually  for each banking  subsidiary and on a
consolidated  basis,  including both reported and managed assets and liabilities
in its measurement and management. To measure exposure to interest rate changes,
the Company uses net interest income (NII) and market value of portfolio  equity
(MVPE) simulation analysis.

     The following table presents the estimated effects of positive and negative
parallel shifts in interest rates as calculated at March 31, 2000 and takes into
consideration the Company's current hedging activity:
<TABLE>
<CAPTION>
                                                                                 March 31, 2000 (1)
                                                                           ----------------------------
     Change in Interest Rates                                                   Percentage Change In
                                                                           ----------------------------
     (in basis points)                                                          NII (2)       MVPE (3)
    ---------------------------------------------------------------------------------------------------
     <S>                                                                        <C>             <C>
     +200                                                                        0.8%           (4.3)%
     Flat                                                                          0%               0%
     -200                                                                      (0.8)%             5.4%
</TABLE>

     (1)  The  information  shown  is  presented  on  a  consolidated,   managed
          asset/liability  basis,  giving effect to securitizations  and related
          funding.
     (2)  The percentage change in this column represents NII for 12 months in a
          stable interest rate environment  versus the NII in the specified rate
          scenarios.
     (3)  The percentage  change in this column  represents the MVPE in a stable
          interest  rate  environment  versus  the  MVPE in the  specified  rate
          scenarios.  MVPE is defined as the present  value of expected net cash
          flows from  existing  assets,  minus the present value of expected net
          cash  flows  from  existing  liabilities,  plus the  present  value of
          expected net cash flows from existing off-balance sheet transactions.

As part of its interest  rate risk  measurement  process,  the Company must make
reasonable  estimates  about how its customers and  competitors  will respond to
changes  in market  interest  rates.  In  addition,  the  repricing  of  certain
categories  of assets  and  liabilities  is  subject  to  competitive  and other
pressures  beyond  the  Company's  control.  As a  result,  certain  assets  and
liabilities  assumed to mature or otherwise  reprice within a certain period may
in  fact  mature  or  reprice  at  different  times  and at  different  volumes.
Therefore, the table above should be viewed as the Company's best estimate as to
the  general  effect of broad  and  sustained  interest  rate  movements  on the
Company's net income and portfolio value.

     The Company seeks to mitigate earnings volatility  associated with interest
rate movement by generally  matching the repricing  characteristics  of reported
and managed assets and liabilities.  Fixed rate liabilities generally fund fixed
APR assets, while variable rate liabilities  generally fund variable APR assets.
Given the Company-directed  repricing  characteristics of its credit card assets
and historically  favorable funding rates for variable liabilities,  the Company
uses variable rate  liabilities  to fund a portion of its fixed rate credit card
assets.

     The Company uses derivative financial  instruments,  including swap and cap
agreements  with indices that  correlate to managed  assets or  liabilities,  to
modify its indicated net interest sensitivity to levels deemed appropriate based
on the  Company's  risk  tolerance.  The  objective  in using these hedges is to
reduce interest rate risk by more closely aligning the repricing characteristics
of the Company's assets and liabilities.

     The Company does not trade in derivatives  or use  derivatives to speculate
on interest rates or as an investment vehicle.  The following table presents the
notional amounts of swap and cap agreements purchased for the periods indicated:

 <TABLE>
<CAPTION>
                                                                       Three Months Ended
                                                                             March 31
                                                               -------------------------------------
     (dollars in thousands)                                         2000                   1999
     -----------------------------------------------------------------------------------------------
     <S>                                                       <C>                   <C>
     Swap agreements:
              Beginning balance                                $    880,000         $    635,500
              Additions                                             100,000                    -
              Maturities                                                  -                    -
                                                               -------------------------------------
              Ending balance                                   $    980,000         $    635,500
                                                               =====================================

     Interest rate caps:
              Beginning balance                                $    644,878         $    671,000
              Additions                                              96,750               50,000
              Maturities                                             98,701               52,000
                                                               -------------------------------------
              Ending balance                                   $    642,927         $    669,000
                                                               =====================================

</TABLE>

Notional  amounts of swaps  outstanding  have increased to offset,  in part, the
growth  of  fixed  rate  deposits.   As  market   conditions  or  the  Company's
asset/liability  mix change,  the Company may  increase or decrease the notional
amount of swaps and caps  outstanding in order to manage the Company's  interest
rate risk profile.

     The  Company  manages  credit risk  arising  from  derivative  transactions
through an ongoing credit review,  approval,  and  monitoring  process.  "Credit
risk" for these derivative  transactions is defined as the risk that a loss will
occur as the result of a derivative  counterparty  defaulting on a contract when
the contract is in a favorable economic position to the Company. The Company may
enter into master netting,  market settlement,  or collateralization  agreements
with derivative  counterparties  to reduce the credit exposure  arising from its
hedging transactions.

<PAGE>

PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings.
     Beginning  in May 1999,  the  Company  was the  subject  of media  coverage
concerning   complaints  made  by  some  customers  of  the  Company's   banking
subsidiaries  regarding certain sales and collections  practices.  Following the
initial media coverage,  the San Francisco  District  Attorney's Office began an
investigation into the Company's sales and collections practices,  including the
marketing of certain  membership  services  products and the posting of customer
payments. In November 1999, the Company received an inquiry from the Connecticut
Attorney  General's  Office  seeking  information  in  connection  with a  civil
investigation into the Company's credit card issuance and billing practices. The
remedies  available  to the San  Francisco  District  Attorney's  Office and the
Connecticut  Attorney General's Office include, but are not limited to, damages,
penalties,  fines and/or injunctive  relief.  The Company continues to cooperate
and have  discussions with the San Francisco  District  Attorney's  Office.  The
Comptroller has recently joined these discussions.  There can be no certainty as
to the  outcome  of  these  discussions.  The  Company  also has met with and is
cooperating with the Connecticut Attorney General's Office.

     Since May 1999,  a number of lawsuits  have been filed  against the Company
and, in some cases, against certain of the Company's subsidiaries by current and
former customers of the Company's banking subsidiaries.  A consolidated putative
class action lawsuit (In re Providian Credit Card Litigation) (the "Consolidated
Action")  was filed in August 1999 in  California  state court in San  Francisco
against the Company, Providian National Bank and certain other subsidiaries, and
seeks unspecified  damages,  including actual and punitive  damages,  attorney's
fees and injunctive  relief. The complaint alleges unfair and deceptive business
practices,  including  failure to credit  payments in a timely  fashion,  adding
products and charging fees without  customer  authorization,  changing rates and
terms without proper notice or authorization,  and misleading or deceptive sales
practices.  A few similar actions filed in other  California  counties have been
transferred  to San  Francisco  County  and  coordinated  with the  Consolidated
Action.

     As of May 12,  2000,  six similar  putative  class  actions were pending in
state courts,  three of which were filed in San Francisco Superior Court and are
expected to be coordinated with the Consolidated  Action.  Another similar state
case,  filed in San  Mateo  County,  California,  was not  coordinated  with the
Consolidated Action and will proceed separately. In addition, one putative class
action was filed in Cook County, Illinois. The Company's motions to dismiss this
action have been granted  three times,  although the plaintiff has filed another
motion for leave to amend.  Another  putative class action is pending in Bullock
County,  Alabama. As of May 12, 2000, one consolidated putative class action was
pending in federal court. The federal action (the  "Multidistrict  Action") is a
consolidation  of  several  different  actions  that had been  filed in  various
federal  courts,  and have been  transferred  by the Federal  Judicial  Panel on
Multidistrict Litigation to the Eastern District of Pennsylvania. A consolidated
complaint in the Multidistrict Action was filed on February 4, 2000.

     These  other  state and  federal  actions  contain  substantially  the same
allegations as those alleged in the Consolidated Action;  certain of the actions
also  allege  one or more of the  following:  that the  account  agreement  with
customers  contained  unconscionable or improper terms and fees, that statements
sent to customers  failed to include Credit  Protection and other add-on fees in
the  calculation of the annual  percentage  rate disclosed in those  statements,
refusal to honor  cancellation  requests,  improper obtaining of credit reports,
breached  promises to raise credit limits,  and breached promises of high credit
limits.

     A putative class action (In re Providian Securities Litigation), which is a
consolidation  of complaints  filed in the United States  District Court for the
Eastern District of New York in June 1999, alleges, in general, that the Company
and certain of its officers made false and misleading  statements concerning the
Company's  future  prospects and  financial  results in violation of the federal
securities  laws.  The  putative  class,  which is alleged to have  acquired the
Company's stock between  January 15, 1999 and May 26, 1999,  seeks damages in an
unspecified  amount,  in addition to pre-judgment  and  post-judgment  interest,
costs and attorneys fees. By order dated February 8, 2000, the Federal  Judicial
Panel on Multidistrict  Litigation transferred the consolidated securities cases
to the Eastern  District of  Pennsylvania  for inclusion with the  Multidistrict
Action currently pending in that court.

     The lawsuits described above are at a very early stage. No specific measure
of damages has been demanded.  An informed assessment of the ultimate outcome or
potential liability  associated with these matters is not feasible at this time.
Due to the  uncertainties  of  litigation,  there can be no  assurance  that the
Company  will  prevail on all the claims made  against it.  However,  management
believes  that the Company has  substantive  defenses  and intends to defend the
actions vigorously.

     In addition, the Company is commonly subject to various other pending
and  threatened  legal actions  arising from the conduct of its normal  business
activities. In the opinion of the Company, any liability that is likely to arise
with respect to these additional actions will not have a material adverse effect
on the consolidated financial condition or results of operations of the Company.

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

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

     Exhibit 12.1   Computation  of  Earnings  to  Fixed  Charges  and  Ratio of
                    Earnings  to Combined  Fixed  Charges  and  Preferred  Stock
                    Dividend Requirements.

     Exhibit 27.1   Financial Data Schedule.

(b)  Reports on Form 8-K.

     The Company  filed a report on Form 8-K on February 3, 2000 with respect to
     its Registration Statement on Form S-3.

(e)  Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined  Fixed
     Charges and Preferred Stock Dividend Requirements.

<TABLE>
<CAPTION>
                                                          Three Months
                                                              Ended
                                                             March 31                    Year Ended December 31
                                                                        ---------------------------------------------------------
(dollars in thousands)                                         2000        1999       1998        1997        1996       1995
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                            <C>         <C>        <C>         <C>         <C>        <C>
EARNINGS TO FIXED CHARGES:
  Excluding interest on deposits                               13.34       9.83       10.88       14.20       5.93       4.90
  Including interest on deposits                                2.39       2.99        2.93        2.66       2.34       2.34

EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK:(1)
  Excluding interest on deposits                               13.34       9.83       10.88       13.28       5.19       4.32
  Including interest on deposits                                2.39       2.99        2.93        2.63       2.25       2.24

(1)  Preferred  stock dividend  requirements  are adjusted to represent a pretax
     earnings equivalent.
</TABLE>

                                   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: May 15, 2000                          /s/ David J. Petrini
                                            --------------------
                                            David J. Petrini
                                            Executive Vice President and
                                            Chief Financial Officer
                                            (Principal Financial Officer and
                                            Duly Authorized Signatory)

Date: May 15, 2000                          /s/ Daniel Sanford
                                            ------------------
                                            Daniel Sanford
                                            Senior Vice President and Controller
                                            (Chief Accounting Officer and Duly
                                            Authorized Signatory)

<PAGE>
                                  EXHIBIT INDEX


Exhibit No.

     Exhibit 12.1   Computation  of  Earnings  to  Fixed  Charges  and  Ratio of
                    Earnings  to Combined  Fixed  Charges  and  Preferred  Stock
                    Dividend Requirements.

     Exhibit 27.1   Financial Data Schedule