Advanta Reports 59% Increase in First Quarter Results.Business Editors SPRING HOUSE, Pa.--(BUSINESS WIRE)--April 25, 2000 Advanta Advanta is an American banking company. Currently, it controls two banks, Advanta Bank Corp and Advanta National Bank. The banking corporation is not associated with Advanta Energy Corp., an energy consulting practice based in California. Corporation (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : ADVNB; ADVNA ADVNA Advanta Corporation (stock symbol) ) today announced pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the first quarter 2000 of $16.2 million, or $0.63 per share on a diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis for its Class A and Class B shares combined. This represents an increase of 59% over the net operating income of $10.2 million or $0.40 per share for the first quarter of 1999. These results reflect income for Advanta Mortgage that is essentially the same as a portfolio lender LENDER, contracts. He from whom a thing is borrowed. 2. The contract of loan confers rights, and imposes duties on the lender. 1. The lender has the right to revoke the loan at his mere pleasure; 9 Cowen, R. 687; 8 Johns. Rep. 432; 1 T. R. 480; 2 Campb. Rep. . Highlights this quarter include: -- Advanta Business Cards net income of $8.6 million, a 156% increase over the quarter ended March 31, 1999. -- Advanta Mortgage net income of $9.5 million, a 38.4% increase over the quarter ended March 31, 1999. -- Improved asset quality at Advanta Mortgage with over 30 day delinquencies falling to 8.04% from 8.63% at December December: see month. 31, 1999. -- Continued improvements in asset quality at Advanta Business Cards with over 30 day delinquencies improving to 3.44% as compared to 3.70% at December 31, 1999. "We are enthusiastic to report another solid quarter of earnings growth," said Chairman and Chief Executive Officer Dennis Dennis is a male first name derived from the Greco-Roman name Dionysius meaning "servant of Dionysus", the Thracian god of wine, which is ultimately derived from the Greek Dios (Διος, "of Zeus") combined with Nysos or Nysa (Νυσα), where the Alter. "In particular, the continuing strong performance of our business credit card operation demonstrates the successful application of our core information based targeting skills. We spent much of 1999 testing and refining refining, any of various processes for separating impurities from crude or semifinished materials. It includes the finer processes of metallurgy, the fractional distillation of petroleum into its commercial products, and the purifying of cane, beet, and maple sugar our target marketing with the result that we have tripled the pool of qualified small businesses to which we can offer our services. We are seeing increasing response rates and solid credit quality." Net income for the quarter was $17.1 million or $0.67 per share on a diluted basis for Class A and Class B shares combined. These results include $10.9 million of pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern gains in connection with investments of Advanta Partners, the Company's private equity investment affiliate Affiliate Relationship between two companies when one company owns substantial interest, but less than a majority of the voting stock of another company, or when two companies are both subsidiaries of a third company. See: Subsidiaries, parent company. . Also impacting results was a reduction in the Company's retained interests Retained interest (also colloquially known as a payout penalty) is future, currently unpaid, interest that some lenders add to the remaining principal of a loan to determine a payout figure in the event that the loan is terminated before the completion of the original term. in leasing securitizations of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $9.5 million which strengthened the balance sheet. Excluding these items, net income for the quarter was $16.2 million or $0.63 per share on a diluted basis for Class A and Class B shares combined. On a basis that is essentially the same as a portfolio lender, net income for Advanta Mortgage was $9.5 million, as compared to $6.9 million for the quarter ended March 31, 1999. This increase reflects higher yields on originations and an increase in subservicing revenues from growth in the subservicing portfolio. The weighted average yield of mortgage loans originated in the first quarter increased by 35 basis points over the fourth quarter of 1999. Advanta Mortgage's sub-serviced portfolio increased to $13.1 billion at the end of this quarter from $11.9 billion at the end of 1999. Net income for Advanta Business Cards was $8.6 million this quarter compared to $3.3 million for the first quarter of 1999. This increase resulted principally from growth in the number of accounts and receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed . Account originations increased approximately 58% this quarter as compared to the quarter ended December 31, 1999. Approximately 18% of accounts added this quarter were originated entirely online through Advanta's website (which provides instant, real time decisioning) as compared to 10% in the fourth quarter of 1999. Managed receivables for Advanta Business Cards at the end of the quarter were $1.2 billion. Advanta generated $30.6 million of cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses , after considering key mortgage non-cash income and expense items and the cash impact of mortgage loan originations The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. . Advanta ended the quarter with approximately $750 million in total liquidity after paying down $122 million of Medium Term Notes during the quarter. In addition, the Company had financed, with parent and bank funds, loan receivables on its books totaling $1.6 billion and had available approximately $1.1 billion in unused warehouse lines and Commercial Paper conduit conduit /con·du·it/ (kon´doo-it) channel. ileal conduit the surgical anastomosis of the ureters to one end of a detached segment of ileum, the other end being used to form a stoma on the facilities at March 31, 2000. Advanta management will hold a conference call today, April 25, 2000, at 9:00 am Eastern time. Investors can listen to the call live over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the through http://www.advanta.com or http://www.vcall.com. To listen to the live call, please go to the web site at least fifteen minutes early to register, download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. , and install any necessary audio software. For those unable to listen to the live broadcast, replays will be available shortly after the call on the Vcall site. Advanta (http://www.advanta.com) is a highly focused financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. company with over 2,800 employees, servicing over $25 billion of assets, including $12.5 billion in managed assets and over $13 billion in assets serviced for third parties. Advanta provides consumers and small businesses with targeted financial products and services, including non-conforming mortgages A non-conforming mortgage is a term in the United States for a residential mortgage that does not conform to the loan purchasing guidelines set by the Federal National Mortgage Association /Federal Home Loan Mortgage Corporation (Fannie Mae and Freddie Mac). , business credit cards, equipment leases, insurance and deposit products. The Company is also one of the largest servicers of non-conforming mortgages for third parties in the country. Advanta has leveraged its first-class direct marketing and information based expertise to develop state-of-the-art data warehousing See data warehouse. data warehousing - data warehouse and statistical modeling tools that identify potential customers and new target markets. Advanta created one of the first automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. and sales engines in the non-conforming mortgage industry. The Company also offers its customers and business partners a broad range of self-service financial solutions and other services on the Internet. Advanta was ranked one of the 500 Most Admired ad·mire v. ad·mired, ad·mir·ing, ad·mires v.tr. 1. To regard with pleasure, wonder, and approval. 2. To have a high opinion of; esteem or respect. 3. Companies in America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. in FORTUNE Magazine's most recent annual survey. This Press Release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. The most significant among these risks and uncertainties are: (1) the Company's managed net interest margin; (2) competitive pressures; (3) factors that affect the level of delinquencies and charge-offs, including a deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. of general economic conditions; (4) the rate of prepayments Prepayments Payments made in excess of scheduled mortgage principal repayments. ; (5) interest rate fluctuations; (6) the level of expenses; (7) managed and sub-serviced receivables volume; (8) the timing of the securitizations of the Company's receivables; (9) the level of insurance policy renewals; (10) the effects of government regulation; (11) relationships with significant vendors, business partners and customers; (12) the amount and cost of financing available to the Company; and (13) the ratings on the debt of the Company and its subsidiaries. Additional risks that may affect the Company's future performance are detailed in the Company's filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and its Quarterly Reports on Form 10-Q Form 10-Q See 10-Q. .
Advanta Corp.
Supplemental Consolidating Income Statement
(in thousands)
Three Months Ended March 31, 2000
-----------------------------------------------------
Advanta Advanta
Advanta Business Leasing
Mortgage Cards Services Other (a) Total
-------- -------- -------- -------- --------
Revenues:
Interest
income $ 47,732 $ 15,884 $ 4,039 $ 14,499 $ 82,154
Securitization
income 26,476 13,244 (7,465)(b) 0 32,255
Servicing
revenues 32,119 3,840 1,728 0 37,687
Other
revenues, net 1,479 14,038 5,185 10,039 30,741
-------- -------- -------- -------- --------
Total revenues 107,806 47,006 3,487 24,538 182,837
-------- -------- -------- -------- --------
Expenses:
Operating
expenses 63,848 19,102 8,787 1,972 93,709
Interest
expense 24,575 6,101 3,001 14,078 47,755
Provision for
credit losses 2,123 7,620 1,656 0 11,399
Minority int
in inc. of
consolidated 1,798 244 178 0 2,220
sub
-------- -------- -------- -------- --------
Total expenses 92,344 33,067 13,622 16,050 155,083
-------- -------- -------- -------- --------
Income (loss)
before income
taxes 15,462 13,939 (10,135) 8,488 27,754
Income tax
expense
(benefit) 5,953 5,367 (3,902) 3,267 10,685
-------- -------- -------- -------- --------
Net income
(loss) $ 9,509 $ 8,572 $ (6,233) $ 5,221 $ 17,069
======== ======== ======== ======== ========
(a) Other includes insurance operations and investment activities not
attributable to other segments.
(b) Leasing securitization income includes a $9,500 reduction in
Advanta's retained interests in leasing securitizations.
Advanta Corp.
Reconciliation of Advanta Mortgage to
Portfolio Lender Earnings Format
(in thousands)
Three Months Ended March 31, 2000
------------------------------------------------------
Advanta Pro Forma
Advanta Mortgage as Remaining
Mortgage as Pro Forma Portfolio Businesses Pro Forma
Reported Adjustments Lender (f) Consolidated
--------- --------- --------- --------- ---------
Revenues:
Interest
income $ 47,732 $ 177,904(a) $ 225,636 $ 34,422 $ 260,058
Securitization
income 26,476 (26,476)(b) 0 15,279 15,279
Servicing
revenues 32,119 (12,238)(c) 19,881 5,568 25,449
Other
revenues, net 1,479 0 1,479 18,348 19,827
--------- --------- --------- --------- ---------
Total
revenues 107,806 139,190 246,996 73,617 320,613
--------- --------- --------- --------- ---------
Expenses:
Operating
expenses 63,848 1,809(d) 65,657 29,861 95,518
Interest
expense 24,575 115,787(a) 140,362 23,180 163,542
Provision for
credit losses 2,123 21,594(e) 23,717 9,276 32,993
Minority
interest in
income of
consolidated
subsidiary 1,798 0 1,798 422 2,220
--------- --------- --------- --------- ---------
Total
expenses 92,344 139,190 231,534 62,739 294,273
--------- --------- --------- --------- ---------
Income before
income taxes 15,462 0 15,462 10,878 26,340
Income tax
expense 5,953 0 5,953 4,188 10,141
--------- --------- --------- --------- ---------
Net income $ 9,509 $ 0 $ 9,509 $ 6,690 $ 16,199
--------- --------- --------- --------- ---------
Footnotes for pro forma adjustments:
(a) Represents the adjustment to interest income and interest expense
as if the securitized mortgage loans were still owned by Advanta
and remained on the balance sheet for the period presented.
(b) Represents the reclassification of net gains recognized on the
sale of mortgage loans for the period.
(c) Represents the reclassification of servicing revenues on
securitized mortgage loans for the period presented.
(d) Represents the reclassification of securitization costs incurred
by Advanta.
(e) Represents the amount by which the provision for credit losses
would have increased had the securitized mortgage loans remained
on the balance sheet and the provision for credit losses on
securitized receivables been equal to actual reported charge-offs.
(f) Adjusted to exclude the pretax gain associated with Advanta
Partners investments of $10,914, and a pretax reduction in
Advanta's retained interests in leasing securitizations of $9,500.
Advanta Corp.
Highlights
(in thousands)
Three Months Ended
---------------------------------------------------
Percent
Change
From
March 31, December 31, March 31, Prior
2000 1999 1999 Quarter
------------ ------------ ------------ -------
ORIGINATIONS
------------
Direct $ 380,040 $ 441,299 $ 403,204 -13.9%
Broker 183,254 198,820 174,087 -7.8
Conduit 0 3,506 117,286 -100.0
Corp. Finance 1,454 960 16,773 51.5
Auto 0 0 5,103 0.0
------------ ------------ ------------ -------
Total Advanta
Mortgage loans $ 564,748 $ 644,585 $ 716,453 -12.4%
Business cards $ 747,587 $ 609,078 $ 400,428 22.7%
Leases 109,082 117,677 109,836 -7.3
SECURITIZATION/
SALES VOLUME
--------------
Advanta Mortgage $ 483,944 $ 163,542 $ 634,147 195.9%
Business cards 157,067 35,942 25,000 337.0
Leases 107,253 105,300 95,574 1.9
------------ ------------ ------------ -------
Total
securitization/
sales volume $ 748,264 $ 304,784 $ 754,721 145.5%
AVERAGE MANAGED
RECEIVABLES
---------------
Mortgage loans $ 8,346,321 $ 8,261,925 $ 8,114,144 1.0%
Business cards 1,120,635 974,025 822,852 15.1
Leases 805,404 766,871 663,874 5.0
Auto loans 77,445 93,189 198,321 -16.9
Other loans 20,752 17,643 17,820 17.6
------------ ------------ ------------ -------
Total average
managed
receivables $ 10,370,557 $ 10,113,653 $ 9,817,011 2.5%
Total average
serviced
receivables $ 22,877,022 $ 21,239,095 $ 18,397,098 7.7%
ENDING MANAGED
RECEIVABLES
--------------
Mortgage loans $ 8,390,122 $ 8,299,685 $ 8,212,797 1.1%
Business cards 1,226,210 1,040,114 832,086 17.9
Leases 821,258 795,643 700,383 3.2
Auto loans 74,652 83,851 185,621 -11.0
Other loans 19,521 21,930 17,093 -11.0
------------ ------------ ------------ -------
Total managed
receivables $ 10,531,763 $ 10,241,223 $ 9,947,980 2.8%
Total serviced
receivables $ 23,607,975 $ 22,142,890 $ 18,858,811 6.6%
IO AND CMSR
ROLLFORWARD
------------
Beginning
balance $ 208,277 $ 245,551 $ 283,521
Retained IO on
sales, net 18,663 3,701 32,769
Hedge impact (1,918) (201) (3,614)
Write-down
related to
auto loans 0 0 (7,828)
Interest income 20,346 14,030 15,902
Cash received (38,830) (44,365) (48,001)
Additional
reserves 0 (10,439) 0
Other, net 0 0 (873)
------------ ------------ ------------
Ending balance $ 206,538 $ 208,277 $ 271,876
------------ ------------ ------------
Advanta Corp.
Highlights (continued)
(in thousands, except per share data)
Three Months Ended
---------------------------------------------
Percent
Change
From
March 31, December 31, March 31, Prior
2000 1999 1999 Quarter
--------- --------- --------- ------
EARNINGS
--------
As a % of average
managed receivables:
Operating
expenses 3.45% 3.30% 3.47% 4.5%
Charge-offs 1.84 1.80 1.36 2.2
Efficiency
ratio 60.81 60.35 72.35 0.8
Basic earnings
per common share $ 0.68 $ 0.67 $ 0.25 1.9
Diluted
earnings per
common share $ 0.67 $ 0.66 $ 0.25 1.3
Return on
average common
equity 11.37% 11.45% 4.50% -0.7
COMMON STOCK DATA
-----------------
Weighted average
common shares
used to compute:
Basic earnings
per common share 24,785 24,611 23,087 0.7%
Diluted earnings
per common share 25,384 25,139 23,178 1.0
Ending shares
outstanding 27,280 27,344 25,310 -0.2
Stock price:
Class A
High $ 21.875 $ 20.375 $ 15.188 7.4
Low 16.875 14.625 10.313 15.4
Closing 20.313 18.250 11.063 11.3
Class B
High $ 15.500 $ 15.875 $ 12.313 -2.4
Low 11.500 10.438 7.750 10.2
Closing 14.484 14.063 8.938 3.0
Cash dividends
declared
Class A $ 0.063 $ 0.063 $ 0.063 0.0
Class B 0.076 0.076 0.076 0.0
Book value per
common share $ 23.68 $ 23.14 $ 22.41(a) 2.3
(a) Assumes conversion of the Class B Preferred Stock for periods
prior to September 1999.
-Statistical Supplement Available Upon Request-
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