Independent Accountant's Report on Applying
Agreed-Upon Procedures
Board of Directors
Providian National Bank
and
Bankers Trust Company, as Trustee
Providian Master Trust
Per your request, we have performed certain agreed-upon procedures
enumerated below pursuant to Article III, sections 3.06(a) and 3.06(b), of the
Pooling and Servicing Agreement (as amended the "Agreement") between Providian
National Bank (formerly First Deposit National Bank and Providian National
Bank), as Seller and Servicer, and Bankers Trust Company as Trustee on behalf of
the certificateholders of Providian Master Trust (the "Trust"), dated as of June
1, 1993, as amended by Amendment No. 1 dated as of May 1, 1994, Amendment No. 2
dated as of June 1, 1995 and Amendment No. 3 dated as of March 1, 1997, and as
supplemented by the Series 1993-2 Supplement thereto, dated as of June 1, 1993;
as supplemented by the Second Amended and Restated Series 1993-3 Supplement
thereto, dated as of December 1, 1995; as supplemented by the Series 1995-1 and
1995-2 Supplements thereto, dated as of June 1, 1995; as supplemented by the
Series 1996-1 Supplement thereto, dated as of June 1, 1996; as supplemented by
the Series 1997-1 and the Series 1997-2 Supplements thereto, dated as of March
1, 1997; as supplemented by the Series 1997-3 Supplement thereto, dated as of
June 1, 1997 and as supplemented by Series 1997-4 Supplement thereto, dated as
of November 1, 1997. This engagement to apply agreed-upon procedures was
performed in accordance with standards established by the American Institute of
Certified Public Accountants. The sufficiency of the procedures is solely the
responsibility of Providian National Bank and Bankers Trust Company, as Trustee.
Consequently, we make no representation regarding the sufficiency of the
procedures described below either for the purpose for which this report has been
requested or for any other purpose.
1. We inquired of Servicer management as to whether separate Collection
Accounts were maintained by the Trustee during 1997 in accordance with the
terms of the Agreement. We were informed that separate collection accounts
were maintained by the Trustee during 1997 (Article IV section 4.02 of the
Agreement).
2. We selected a sample of six business days ("Selected Days") from the period
October 1, 1996 to September 30, 1997 (April 8, April 10, April 14, April
16, June 6 and June 12) and performed the following (Article III sections
3.01 and 3.04 and Article IV sections 4.02 and 4.03 of the Agreement):
a) We obtained the corresponding day's Transfer of Funds Notice ("TFN")
as prepared by Providian National Bank.
b) We compared the wire amount as set forth in the TFN to the
corresponding amount in the caption "Investor Finance Charge and Fee
Collections" contained in the Collection Data Report, as prepared by
the Servicer. No exceptions were noted.
c) We compared the total finance charge collections, gross fee, and
principal collections for the Selected Days to the Agent Bank Summary
Report ("ABS"), which is prepared by the Providian National Bank's
third party bank card processor, Total System Services, Inc. ("TSYS").
No exceptions were noted.
d) We compared the collection date for the days selected per the
Collection Data Report to the corresponding TFN to determine that the
wire transfers occurred no later than three business days after the
collection date. No exceptions were noted.
e) For the Selected Days, we recalculated all mathematical calculations
contained in the Collection Data Report. No exceptions were noted.
3. We obtained Monthly Servicer's Certificates and the Monthly Statements for
all Series issued for all months from October 1996 through September 1997.
We noted that the Certificates were signed by an authorized officer, and
that management asserted that no Pay Out Event had occurred.
4. For the months of October 1996 through September 1997 for Series 1993-2,
1993-3, 1995-1, 1995-2, and 1996-1; for the months of March through
September 1997 for Series 1997-1 and 1997-2; and for the months of June
through September 1997 for Series 1997-3, we obtained Providian National
Bank-prepared Monthly Statements and performed the following (Article III
section 3.04 and Article IV sections 4.03 and 4.04 of the Agreement):
a) For the month of July for Series 1993-2, 1993-3, 1995-1, 1995-2, 1996-
1, 1997-1, 1997-2, and 1997-3 and the month of March for Series
1993-3, we recalculated all mathematical calculations in the monthly
Statements, and compared the related Trust activity amounts reported
in the monthly statements to the amounts reported in the corresponding
month's reports generated from TSYS. No exceptions were noted.
b) For the remaining months, we compared the related Trust activity
amounts to the Dual Seller Allocation model output (prepared by the
Servicer). No exceptions were noted.
c) We recomputed the mathematical calculation that determines the
investor and seller portions (Article III section 3.04 and Article IV
sections 4.03 and 4.04 of the Agreement). No exceptions were noted.
5. We obtained direct confirmation of the Servicer's fidelity bond coverage
insuring against losses through wrongdoing of its officers and associates
who are involved in the servicing of receivables. The insurer stated that
the coverage is currently maintained and was in force throughout 1997.
6. We inquired of Servicer personnel responsible for investments in the
Collection Accounts. The Servicer personnel informed us that deposits in
the Collection Accounts were invested in Eligible Investments only, as
defined in Article I of the Agreement (Article IV section 4.02 of the
Agreement).
7. The Servicer provided us with written representations that no Pay Out
Event, as the term is defined in the Agreement, occurred during the twelve
months ended September 30, 1997 for any series during its revolving period
(Article IX Section 9.01).
8. We obtained written representation from management of Providian National
Bank that, to the best of their knowledge, Providian National Bank has
recorded all material transactions properly relating to the Agreement, and
Providian National Bank has complied with all material aspects of the
Agreement. (Articles III and IV and section 8.08 of the Agreement).
9. We obtained copies of the Annual Servicer's Certificate and compared the
form of the Annual Servicer's Certificates to Exhibit D of the Agreement
(Article III section 3.05 of the Agreement). No exceptions were noted.
We were not engaged to, and did not, perform an examination, the objective of
which would be the expression of an opinion on the monthly certificates for each
series included in the Trust, prepared by the Servicer pursuant to Article III,
sections 3.06(a) and 3.06(b), of the Agreement or on the reports prepared by the
Servicer. Accordingly, we do not express such an opinion. Had we performed
additional procedures with respect to both the monthly certificates prepared by
the Servicer pursuant to Article III, sections 3.06(a) and 3.06(b) of the
Agreement and the reports prepared by the Servicer, which were the source of
such amounts, other matters might have come to our attention that would have
been reported to you.
This report is intended solely for the use and information of Providian National
Bank and the Trustee and should not be used by those who have not agreed to the
procedures and taken responsibility for the sufficiency of the procedures for
their purposes.
/s/ Ernst & Young LLP
March 25, 1998
Independent Accountant's Report
Board of Directors
Providian National Bank
We have examined management's assertion, included in the accompanying
Report of Management on Master Trust Internal Controls and Pooling and Servicing
Agreement Compliance ("Report"), that Providian National Bank (formerly First
Deposit National Bank and Providian National Bank), as Seller and Servicer,
maintained internal controls over the functions performed as servicer of the
Providian Master Trust ("Trust") that are effective, as of December 31, 1997, in
providing reasonable assurance that Trust assets are safeguarded against loss
from unauthorized use or disposition and that transactions are executed in
accordance with management's authorization in conformity with the Pooling and
Servicing Agreement (as amended, the "Agreement"), dated as of June 1, 1993, as
amended by Amendment No. 1 dated as of May 1, 1994, Amendment No. 2 dated as of
June 1, 1995 and Amendment No. 3 dated as of March 1, 1997, and as supplemented
by the Series 1993-2 Supplement thereto, dated as of June 1, 1993; as
supplemented by the Second Amended and Restated Series 1993-3 Supplement
thereto, dated as of December 1, 1995; as supplemented by the Series 1995-1 and
1995-2 Supplements thereto, dated as of June 1, 1995; as supplemented by the
Series 1996-1 Supplement thereto, dated as of June 1, 1996; as supplemented by
the Series 1997-1 and the Series 1997-2 Supplements thereto, dated as of March
1, 1997; as supplemented by the Series 1997-3 Supplement thereto, dated as of
June 1, 1997 and as supplemented by the Series 1997-4 Supplement thereto, dated
as of November 1, 1997 between Providian National Bank and Bankers Trust
Company, as Trustee, and are recorded properly to permit the preparation of the
required financial reports. As discussed in that report, management is
responsible for Providian National Bank's internal controls over compliance with
those requirements during the period ended December 31, 1997. Our responsibility
is to express an opinion on management's assertion about Providian National
Bank's internal controls over compliance based on our examination.
Our examination was made in accordance with standards established by the
American Institute of Certified Public Accountants and, accordingly, included
obtaining an understanding of the controls over the functions performed by
Providian National Bank as servicer of the Trust, testing, and evaluating the
design and operating effectiveness of the controls, and such other procedures as
we considered necessary in the circumstances. We believe that our examination
provides a reasonable basis for our opinion. Our examination does not provide a
legal determination on Providian National Bank's internal control over
compliance with specified requirements.
Because of inherent limitations in any internal controls, errors or
irregularities may occur and not be detected. Also, projections of any
evaluation of the internal controls over the functions performed by Providian
National Bank as servicer of the Trust to future periods are subject to the risk
that the controls may become inadequate because of changes in conditions, or
that the degree of compliance with the controls may deteriorate.
In our opinion, management's assertion that Providian National Bank maintained
controls over the functions performed as servicer of the Trust that are
effective, as of December 31, 1997, in providing reasonable assurance that Trust
assets are safeguarded against loss from unauthorized use or disposition and
that transactions are executed in accordance with management's authorization in
conformity with the Agreement and the Supplements to the Agreement referred to
above, between Providian National Bank and Bankers' Trust Company, and are
recorded properly to permit the preparation of the required financial reports,
is fairly stated, in all material respects, based upon the following criteria
specified in the Report:
-- Controls provide reasonable assurance that funds collected are
appropriately remitted to the Trustee in accordance with the Agreement and
the Supplements to the Agreement.
-- Controls provide reasonable assurance that Trust assets are segregated from
those assets retained by Providian National Bank in accordance with the
Agreement and the Supplements to the Agreement.
-- Controls provide reasonable assurance that expenses incurred by the Trust
are properly calculated and remitted in accordance with the Agreement and
the Supplements to the Agreement.
-- Controls provide reasonable assurance that the addition of accounts to the
Trust are authorized in accordance with the Agreement and the Supplements
to the Agreement.
-- Controls provide reasonable assurance that the removal of accounts from the
Trust are authorized in accordance with the Agreement and the Supplements
to the Agreement.
-- Controls provide reasonable assurance that Trust assets amortizing out of
the Trust are calculated in accordance with the Agreement and the
Supplements to the Agreement.
-- Controls provide reasonable assurance that Monthly Servicer's Certificates
generated in the form of "Exhibits" and provided to the Trustee are
reviewed by management prior to disbursing.
-- Controls provide reasonable assurance that Monthly Servicer's Certificates
generated in the form of "Exhibits" contain information required by the
Agreement and the Supplements to the Agreement.
This report is intended solely for your information. However, this report is a
matter of public record as a result of being included as an exhibit to the
report on Form 10-K prepared by Providian National Bank and filed with the
Securities and Exchange Commission on behalf of the Providian Master Trust and
its distribution is not limited.
/s/ Ernst & Young LLP
March 25, 1998
Independent Accountant's Report
Providian National Bank
and
Bankers Trust Company
We have examined management's assertion, included in the accompanying Report of
Management on Master Trust Internal Controls and Pooling and Servicing Agreement
Compliance (the "Report"), about Providian National Bank's (formerly First
Deposit National Bank and Providian National Bank) compliance with the relevant
terms and conditions of Articles III and IV, and Sections 8.08 and 9.01 of the
Pooling and Servicing Agreement, dated as of June 1, 1993 as amended, between
Providian National Bank and Bankers Trust Company (the "Agreement") and Articles
IV and V of the Supplements to the Agreement relating to Series 1993-2, Series
1993-3, Series 1995-1, Series 1995-2, Series 1996-1, Series 1997-1, Series
1997-2, Series 1997-3 and Series 1997-4 as of December 31, 1997 and for the year
then ended. Management is responsible for Providian National Bank's compliance
with those requirements. Our responsibility is to express an opinion on
management's assertion about Providian National Bank's compliance based on our
examination.
Our examination was made in accordance with standards established by the
American Institute of Certified Public Accountants and, accordingly, included
examining, on a test basis, evidence about Providian National Bank's compliance
with those requirements and performing such other procedures as we considered
necessary in the circumstances. We believe that our examination provides a
reasonable basis for our opinion. Our examination does not provide a legal
determination of Providian National Bank's compliance with specified
requirements.
In our opinion, management's assertion that Providian National Bank was in
compliance, in all material respects, with the terms and conditions of the
sections of the Agreement and the provisions of each Supplement to the Agreement
referred to above, as of December 31, 1997 and for the year then ended, is
fairly stated, in all material respects.
This report is intended solely for your information. However, this report is a
matter of public record as a result of being included as an exhibit to the
annual report on Form 10-K prepared by Providian National Bank and filed with
the Securities and Exchange Commission on behalf of the Providian Master Trust
and its distribution is not limited.
March 25, 1998 /s/ Ernst & Young