Advanta Reports Fourth Quarter and Full Year 2004 Earnings; 2004 Advanta Business Cards Net Income Increased 33%.SPRING HOUSE, Pa. -- 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. Corp. (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 reported net income for Advanta Business Cards of $13.2 million for fourth quarter and $46.0 million for full year 2004. This compares to $11.6 million for fourth quarter 2003 and $34.6 million for full year 2003. "The increased profitability of Advanta Business Cards in 2004 reflects our continued success in attracting and retaining high credit quality customers and building strong relationships with these customers through the services we offer," said 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, Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "The benefits of our strategy are evident in the asset quality of our portfolio, which ended the year with the best metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. that we have reported since we began focusing exclusively on the small business credit card market." Advanta reported consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: net income for fourth quarter 2004 of $13.7 million or $0.48 per 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. share for Class A and Class B shares combined as compared to consolidated net income of $11.2 million or $0.44 per combined diluted share for fourth quarter 2003. Consolidated net income for fourth quarter 2004 includes a $0.01 per diluted share asset valuation gain associated with the Company's venture capital portfolio and a $0.01 per diluted share net gain on discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . On a full year basis, Advanta reported consolidated net income of $44.7 million or $1.62 per combined diluted share as compared to $28.2 million or $1.13 per combined diluted share for 2003. Consolidated net income for 2004 includes a $0.03 per diluted share asset valuation charge associated with the Company's venture capital portfolio, a $0.02 per diluted share charge associated with the closure of the Company's New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of venture capital office in the first quarter of 2004 and a $0.02 per diluted share net gain on discontinued operations. Consolidated net income for 2003 includes a $0.09 per diluted share asset valuation charge associated with the Company's venture capital portfolio and an $0.08 per diluted share net loss on discontinued operations. Advanta Business Card results for fourth quarter 2004 reflect a 127 basis point decline in net principal charge-offs on managed 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 to 6.04% on an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. basis as compared to 7.31% for fourth quarter 2003. Over 30 day delinquencies on managed receivables declined 170 basis points to 4.12% and over 90 day delinquencies on managed receivables decreased 94 basis points to 1.99%, each as compared to fourth quarter 2003. Business Cards ended the quarter with managed receivables of $3.3 billion as compared to $3.0 billion at December December: see month. 31, 2003. Net principal charge-offs on owned receivables decreased 90 basis points to 5.94% on an annualized basis for fourth quarter 2004 as compared to 6.84% for fourth quarter 2003. Over 30 day delinquencies on owned receivables declined 101 basis points to 3.87% and over 90 day delinquencies on owned receivables decreased 58 basis points to 1.87%, each as compared to fourth quarter 2003. Owned Business Card receivables were $730 million at December 31, 2004 as compared to $518 million at December 31, 2003. Conference Call Details Advanta management will hold a conference call with analysts and institutional investors Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. today, January January: see month. 25, at 9:00 a.m. Eastern time. The call will be broadcast simultaneously si·mul·ta·ne·ous adj. 1. Happening, existing, or done at the same time. See Synonyms at contemporary. 2. Mathematics for the public 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 www.advanta.com or www.vcall.com. To listen to the live call, please go to the website at least 15 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. Replays of the call will be available beginning at noon today on the Internet at www.advanta.com or www.vcall.com or by dialing 719-457-0820 and referring to confirmation code 4677504. The conference call may include a discussion of non-GAAP financial measures, which are reconciled rec·on·cile v. rec·on·ciled, rec·on·cil·ing, rec·on·ciles v.tr. 1. To reestablish a close relationship between. 2. To settle or resolve. 3. to the most directly comparable GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). financial measure in this press release or our statistical supplements, both available at www.advanta.com in the "Corporate Info INFO Information INFO Information (logging abbreviation) INFO Inform(ed/ation) INFO Ionic Difluoroamino Oxidizer " section. About Advanta Advanta focuses on the small business market and related community, providing funding and support to the nation's small businesses through innovative products and services. Using its direct marketing and information based expertise, Advanta identifies potential customers and provides a high level of service tailored to the unique needs of small businesses. Advanta is one of the nation's largest issuers (through Advanta Bank Corp.) of MasterCard MasterCard Worldwide (NYSE: MA) is a mutinational corporation based in Purchase, NY in the United States. Throughout the world, its principal business is to process payments between the banks of merchants and the banks of purchasers that use its "Mastercard" branded debit- and business credit cards to small businesses. Since 1951, Advanta has pioneered many of the marketing techniques common in the 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. industry today, including remote lending and direct mail, affinity The relationship that a person has to the blood relatives of a spouse by virtue of the marriage. The doctrine of affinity developed from a Maxim of Canon Law that a Husband and Wife were made one by their marriage. There are three types of affinity. and relationship marketing. Learn more about Advanta at www.advanta.com. 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 from those projected. 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. . In addition to the GAAP results provided throughout this document, the Company has provided managed receivable data and other non-GAAP financial measurements. Management believes that these non-GAAP financial measures used in managing the business may provide users additional useful information. The tables attached to this press release include a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measure and a description of why the non-GAAP financial measures are useful to investors.
ADVANTA
SEGMENT INCOME STATEMENT
(in thousands)
Three Months Ended
December 31, 2004
----------------------------------------------------------------------
Advanta
Business Venture
Cards Capital Other (A) Total
-------- ------- --------- --------
Interest income $27,694 $ 7 $ 2,513 $30,214
Interest expense 8,842 60 3,059 11,961
-------- ------- --------- --------
Net interest income 18,852 (53) (546) 18,253
Provision for credit losses 10,721 0 (16) 10,705
-------- ------- --------- --------
Net interest income after
provision for credit losses 8,131 (53) (530) 7,548
Noninterest revenues:
Securitization income 28,192 0 0 28,192
Servicing revenues 12,502 0 0 12,502
Other revenues, net 28,898 510 1,748 31,156
-------- ------- --------- --------
Total noninterest revenues 69,592 510 1,748 71,850
Operating expenses 56,872 27 1,218 58,117
-------- ------- --------- --------
Income before income taxes 20,851 430 0 21,281
Income tax expense 7,688 191 0 7,879
-------- ------- --------- --------
Income from continuing operations 13,163 239 0 13,402
Gain, net, on discontinuance of
mortgage and leasing businesses,
net of tax 0 0 308 308
-------- ------- --------- --------
Net income $13,163 $ 239 $ 308 $13,710
======== ======= ========= ========
Three Months Ended
December 31, 2003
----------------------------------------------------------------------
Advanta
Business Venture
Cards Capital Other (A) Total
-------- ------- --------- --------
Interest income $24,464 $ 0 $ 1,890 $26,354
Interest expense 9,859 90 1,012 10,961
-------- ------- --------- --------
Net interest income 14,605 (90) 878 15,393
Provision for credit losses 10,163 0 (14) 10,149
-------- ------- --------- --------
Net interest income after
provision for credit losses 4,442 (90) 892 5,244
Noninterest revenues:
Securitization income 32,896 0 0 32,896
Servicing revenues 11,298 0 0 11,298
Other revenues, net 25,995 (6) 2,651 28,640
-------- ------- --------- --------
Total noninterest revenues 70,189 (6) 2,651 72,834
Expenses:
Operating expenses 55,790 573 1,323 57,686
Minority interest in income of
consolidated subsidiary 0 0 2,220 2,220
-------- ------- --------- --------
Total expenses 55,790 573 3,543 59,906
-------- ------- --------- --------
Income (loss) before income taxes 18,841 (669) 0 18,172
Income tax expense (benefit) 7,254 (258) 0 6,996
-------- ------- --------- --------
Net income (loss) $11,587 $ (411) $ 0 $11,176
======== ======= ========= ========
(A) Other includes investment and other activities not attributable to
the Advanta Business Cards or Venture Capital segments.
ADVANTA
SUPPLEMENTAL NON-GAAP DISCLOSURE
ADVANTA BUSINESS CARDS MANAGED INCOME STATEMENT
(in thousands)
In addition to evaluating the financial performance of the Advanta
Business Cards segment under U.S. generally accepted accounting
principles (GAAP), we evaluate Advanta Business Cards' performance on
a managed basis. Our managed business credit card receivable portfolio
is comprised of both owned and securitized business credit card
receivables. We sell business credit card receivables through
securitizations accounted for as sales under GAAP. We continue to own
and service the accounts that generate the securitized receivables.
Managed data presents performance as if the securitized receivables
had not been sold. We believe that performance on a managed basis
provides useful supplemental information because we retain interests
in the securitized receivables and, therefore, we have a financial
interest in and exposure to the performance of the securitized
receivables. Revenue and credit data on the managed portfolio provides
additional information useful in understanding the performance of the
retained interests in business credit card securitizations. A
reconciliation of these managed financial measures to the most
directly comparable GAAP financial measures is included in this press
release.
Three Months Ended
-----------------------
Dec. 31, Dec. 31,
2004 2003
---------- ----------
Interest income $ 116,673 $ 114,504
Interest expense 26,127 20,946
---------- ----------
Net interest income 90,546 93,558
Provision for credit losses 49,178 54,053
---------- ----------
Net interest income after provision for credit
losses 41,368 39,505
Noninterest revenues 36,355 35,126
---------- ----------
Risk-adjusted revenues (A) 77,723 74,631
Operating expenses 56,872 55,790
---------- ----------
Income before income taxes 20,851 18,841
Income tax expense 7,688 7,254
---------- ----------
Net income $ 13,163 $ 11,587
========== ==========
Average managed business credit card
receivables $3,258,799 $2,958,835
(A) Risk-adjusted revenues represent net interest income and
noninterest revenues, less provision for credit losses.
ADVANTA
HIGHLIGHTS
(in thousands, except per share data)
Percent
Three Months Ended Change From
---------------------------
Dec. 31, Sept. 30, Dec. 31, Prior Prior
EARNINGS 2004 2004 2003 Quarter Year
----------------------------------------------------------------------
Basic income from
continuing operations per
common share:
Class A $ 0.51 $ 0.40 $ 0.45 27.5 % 13.3 %
Class B 0.54 0.43 0.47 25.6 14.9
Combined (A) 0.53 0.42 0.47 26.2 12.8
Diluted income from
continuing operations per
common share:
Class A 0.46 0.37 0.43 24.3 7.0
Class B 0.48 0.38 0.44 26.3 9.1
Combined (A) 0.47 0.38 0.44 23.7 6.8
Basic net income per
common share:
Class A 0.52 0.40 0.45 30.0 15.6
Class B 0.55 0.43 0.47 27.9 17.0
Combined (A) 0.54 0.42 0.47 28.6 14.9
Diluted net income per
common share:
Class A 0.47 0.37 0.43 27.0 9.3
Class B 0.49 0.38 0.44 28.9 11.4
Combined (A) 0.48 0.38 0.44 26.3 9.1
Return on average common
equity 14.24 % 11.38 % 13.41 % 25.1 6.2
COMMON STOCK DATA
----------------------------------------------------------------------
Weighted average common
shares used to compute:
Basic earnings per
common share
Class A 8,811 8,803 8,803 0.1 % 0.1 %
Class B 16,630 16,479 15,186 0.9 9.5
------- ------- --------
Total 25,441 25,282 23,989 0.6 6.1
Diluted earnings per
common share
Class A 8,811 8,803 8,803 0.1 0.1
Class B 19,589 19,303 16,704 1.5 17.3
------- ------- --------
Total 28,400 28,106 25,507 1.0 11.3
Ending shares outstanding
Class A 9,607 9,607 9,607 0.0 0.0
Class B 18,350 18,264 17,344 0.5 5.8
------- ------- --------
Total 27,957 27,871 26,951 0.3 3.7
Stock price:
Class A
High $ 24.19 $ 23.55 $ 13.48 2.7 79.5
Low 20.34 19.73 10.60 3.1 91.9
Closing 22.62 22.80 12.93 (0.8) 74.9
Class B
High 26.07 24.44 13.42 6.7 94.3
Low 21.68 20.30 10.55 6.8 105.5
Closing 24.27 24.19 12.72 0.3 90.8
Cash dividends declared:
Class A 0.095 0.095 0.063 0.0 50.0
Class B 0.113 0.113 0.076 0.0 50.0
Book value per common
share 14.90 14.54 13.87 2.5 7.4
(A) Combined represents income available to common stockholders
divided by the combined total of Class A and Class B weighted
average common shares outstanding.
ADVANTA
BUSINESS CREDIT CARD STATISTICS
($ in thousands)
Three Months Ended Percent Change
----------------------------------- From
Dec. 31, Sept. 30, Dec. 31, Prior Prior
2004 2004 2003 Quarter Year
----------- ----------- ----------- ------- --------
New account
originations 40,663 24,578 42,083 65.4 % (3.4)%
Average number of
active
accounts (A) 575,204 578,162 589,648 (0.5) (2.4)
Ending number of
accounts 777,943 770,195 786,700 1.0 (1.1)
Transaction
volume $2,214,215 $2,125,757 $1,944,617 4.2 13.9
Securitization
volume increase
(decrease)
excluding
replenishment
sales $ 55,000 $ (35,000) $ 119,750 N/M (54.1)
Average managed
receivables:
Owned $ 722,088 $ 646,934 $ 594,034 11.6 21.6
Securitized 2,536,711 2,513,053 2,364,801 0.9 7.3
----------- ----------- -----------
Managed (B) 3,258,799 3,159,987 2,958,835 3.1 10.1
Ending managed
receivables:
Owned $ 730,483 $ 709,991 $ 518,040 2.9 41.0
Securitized 2,564,147 2,511,030 2,463,747 2.1 4.1
----------- ----------- -----------
Managed (B) 3,294,630 3,221,021 2,981,787 2.3 10.5
----------------------------------------------------------------------
CREDIT QUALITY -
OWNED
-----------------
Receivables 30
days or more
delinquent $ 28,287 $ 29,552 $ 25,301
Receivables 90
days or more
delinquent 13,638 14,305 12,696
As a percentage
of gross
receivables:
Receivables 30
days or more
delinquent 3.87% 4.16% 4.88% (7.0)% (20.7)%
Receivables 90
days or more
delinquent 1.87 2.01 2.45 (7.0) (23.7)
Net principal
charge-offs:
Amount $ 10,721 $ 10,448 $ 10,163
As a
percentage of
average gross
receivables
(annualized) 5.94% 6.46% 6.84% (8.0) (13.2)
CREDIT QUALITY -
SECURITIZED
-----------------
Receivables 30
days or more
delinquent $ 107,546 $ 112,674 $ 148,177
Receivables 90
days or more
delinquent 51,770 54,354 74,762
As a percentage
of gross
receivables:
Receivables 30
days or more
delinquent 4.19% 4.49% 6.01% (6.7)% (30.3)%
Receivables 90
days or more
delinquent 2.02 2.16 3.03 (6.5) (33.3)
Net principal
charge-offs:
Amount $ 38,457 $ 40,740 $ 43,890
As a
percentage of
average gross
receivables
(annualized) 6.06% 6.48% 7.42% (6.5) (18.3)
CREDIT QUALITY -
MANAGED (B)
-----------------
Receivables 30
days or more
delinquent $ 135,833 $ 142,226 $ 173,478
Receivables 90
days or more
delinquent 65,408 68,659 87,458
As a percentage
of gross
receivables:
Receivables 30
days or more
delinquent 4.12% 4.42% 5.82% (6.8)% (29.2)%
Receivables 90
days or more
delinquent 1.99 2.13 2.93 (6.6) (32.1)
Net principal
charge-offs:
Amount $ 49,178 $ 51,188 $ 54,053
As a
percentage of
average gross
receivables
(annualized) 6.04% 6.48% 7.31% (6.8) (17.4)
(A) Active accounts are defined as accounts with a balance at month-
end. Active account statistics do not include charged-off
accounts. The statistics reported above represent the average
number of active accounts for the periods presented.
(B) Managed statistics are non-GAAP financial measures and represent
the sum of owned (GAAP) business credit card statistics and
securitized business credit card statistics. We believe that
performance on a managed basis provides useful supplemental
information because we retain interests in the securitized
receivables and, therefore, we have a financial interest in and
exposure to the performance of the securitized receivables.
N/M - Not Meaningful
ADVANTA
RECONCILIATION OF MANAGED INCOME STATEMENT AND BALANCE SHEET MEASURES
TO GAAP FINANCIAL MEASURES
(in thousands)
In addition to evaluating the financial performance of the Advanta
Business Cards segment under U.S. generally accepted accounting
principles (GAAP), we evaluate Advanta Business Cards' performance on
a managed basis. Our managed business credit card receivable
portfolio is comprised of both owned and securitized business credit
card receivables. We sell business credit card receivables through
securitizations accounted for as sales under GAAP. We continue to
own and service the accounts that generate the securitized
receivables. Managed data presents performance as if the securitized
receivables had not been sold. We believe that performance on a
managed basis provides useful supplemental information because we
retain interests in the securitized receivables and, therefore, we
have a financial interest in and exposure to the performance of the
securitized receivables. Revenue and credit data on the managed
portfolio provides additional information useful in understanding the
performance of the retained interests in business credit card
securitizations.
Three Months Ended
December 31, 2004
-------------------------------------
Advanta Advanta
Business Business
Cards Securitization Cards
GAAP Adjustments Managed
--------- -------------- ----------
INCOME STATEMENT MEASURES
Interest income $ 27,694 $ 88,979 $ 116,673
Interest expense 8,842 17,285 26,127
Net interest income 18,852 71,694 90,546
Securitization income 28,192 (28,192) 0
Servicing revenues 12,502 (12,502) 0
Other revenues, net 28,898 7,457 36,355
Total noninterest revenues 69,592 (33,237) 36,355
Provision for credit losses 10,721 38,457 (A) 49,178
-------------------------------------
BALANCE SHEET MEASURES
Average business credit card
receivables 722,088 2,536,711 3,258,799
Ending business credit card
receivables 730,483 2,564,147 3,294,630
Business credit card
receivables:
30 days or more delinquent 28,287 107,546 135,833
90 days or more delinquent 13,638 51,770 65,408
Net principal charge-offs 10,721 38,457 49,178
Three Months Ended
December 31, 2003
-------------------------------------
Advanta Advanta
Business Business
Cards Securitization Cards
GAAP Adjustments Managed
--------- -------------- ----------
INCOME STATEMENT MEASURES
Interest income $ 24,464 $ 90,040 $ 114,504
Interest expense 9,859 11,087 20,946
Net interest income 14,605 78,953 93,558
Securitization income 32,896 (32,896) 0
Servicing revenues 11,298 (11,298) 0
Other revenues, net 25,995 9,131 35,126
Total noninterest revenues 70,189 (35,063) 35,126
Provision for credit losses 10,163 43,890 (A) 54,053
-------------------------------------
BALANCE SHEET MEASURES
Average business credit card
receivables 594,034 2,364,801 2,958,835
Ending business credit card
receivables 518,040 2,463,747 2,981,787
Business credit card
receivables:
30 days or more delinquent 25,301 148,177 173,478
90 days or more delinquent 12,696 74,762 87,458
Net principal charge-offs 10,163 43,890 54,053
(A) The provision for credit losses includes the amount by which the
provision for credit losses would have been higher had the
securitized receivables remained as owned and the provision for
credit losses on securitized receivables been equal to actual
reported charge-offs.
-Statistical supplement available at www.advanta.com-
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