Advanta Reports On-Track Business Card Results.Business Editors SPRING HOUSE, Pa.--(BUSINESS WIRE)--July 24, 2001 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 second quarter net income for Advanta Business Cards of $8.8 million, representing an after tax return on average 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 of 1.9% 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. Continuing on track toward its goals for 2001, operating results from continuing business segments were $0.32 per share for Class A and Class B shares combined as compared to $0.29 per share reported last quarter. The Company generated an increase in risk-adjusted margin to 12.7%, as compared to 12.4% for the first quarter 2001. "Our small business credit card customers continue to provide earnings momentum to us," 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. "Our goal is to prudently pru·dent adj. 1. Wise in handling practical matters; exercising good judgment or common sense. 2. Careful in regard to one's own interests; provident. 3. Careful about one's conduct; circumspect. grow our customer base through continuing product differentiation Product Differentiation A source of competitive advantage that depends on producing some item that is regarded to have unique and valuable characteristics. and market segmentation Market Segmentation A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will respond similarly to a marketing action. of our prospect base of almost 40 million small businesses," said Alter. Details for the second quarter included managed receivables of $1.9 billion at June June: see month. 30, as compared to $1.78 billion at March 31, 2001. The improvement in risk-adjusted margin during the quarter reflects increased card usage and a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. interest rate environment which more than compensated compensated /com·pen·sat·ed/ (kom´pen-sa?tid) counterbalanced; offset. for an anticipated increase in charge-offs. Consistent with the forecasted seasoning of the business card portfolio and the current economic environment, over 30 day delinquencies were 5.8% and charge-offs on an annualized basis were 7.4% at June 30, 2001. Also included in the second quarter results is a $2 million increase in the on-balance sheet loan loss reserve, resulting in a conservative 10.5% reserve to owned receivables at June 30, 2001 as compared to 9.9% at March 31, 2001. Earnings for the quarter, excluding the effects of a previously announced sale of deposit liabilities and discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. , were essentially breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations . The Company recorded pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern asset valuation charges of $5.6 million on its venture capital portfolio consistent with the current market for early stage venture capital investments. The Company also recorded revisions ReVisions is a 2004 anthology of alternate history short-stories. It is edited by Julie E. Czerneda and Isaac Szpindel. Contents Title Author The Resonance of Light James Alan Gardner Out of China Julie E. to its estimates for restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). expenses and discontinued operations associated with mortgage transaction expenses and the valuation of leasing assets. As a result of these non-operating items and restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. , the Company reported a net loss for the quarter including discontinued operations of $7.2 million, or $0.28 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. During the quarter, Advanta strategically used the over $1 billion proceeds from the sale of its mortgage business in February February: see month. 2001 to strengthen the Company for the future. Capitalizing on its large cash position, Advanta significantly reduced debt and deposits by $902 million, including substantially all of its outstanding institutional debt and a considerable amount of its retail notes. Through July July: see month. 23, 2001, the Company repurchased in excess of 100,000 shares of its Class B Common Stock pursuant to its previously announced plan to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. up to 1.5 million shares of common stock and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. the equivalent dollar amount of trust preferred securities. 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, July 24, 2001, at 9:00 am 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 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. Replays will be available shortly after the call on the Vcall site. Advanta 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 which has been providing innovative financial solutions since 1951. Advanta leverages 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. Over the past five years, it has used these distinctive capabilities to become one of the nation's largest issuers 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. 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 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) factors affecting fluctuations in the number of accounts or loan balances; (5) interest rate fluctuations; (6) the level of expenses; (7) the timing of the securitizations of the Company's receivables; (8) factors affecting the value of investments held by the Company; (9) the effects of government regulation, including restrictions and limitations imposed by banking laws, regulators, examinations, and the agreements between the Company's bank subsidiaries and their regulators; (10) relationships with significant vendors and business partners; (11) the amount and cost of financing available to the Company; (12) the ratings on the debt of the Company and its subsidiaries; (13) the completion of the post-closing process following the sale of our mortgage business and the ultimate amount of restructuring and other related charges associated with the conclusion of strategic alternatives process for our mortgage and leasing businesses; (14) the impact of litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ; and (15) the ability to attract and retain key personnel. 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
June 30, 2001
----------------------------------------------------------------------
Advanta Venture
Business Cards Capital Other (A) Total
-------- ------- -------- --------
Interest income $ 19,113 $ 2 $ 13,721 $ 32,836
Interest expense 7,998 421 17,700 26,119
-------- ------- -------- --------
Net interest income 11,115 (419) (3,979) 6,717
Provision for
credit losses 8,184 0 200 8,384
-------- ------- -------- --------
Net interest income
after provision
for credit losses 2,931 (419) (4,179) (1,667)
Noninterest revenues:
Securitization income 25,609 0 0 25,609
Servicing revenues 6,909 0 0 6,909
Interchange income 20,586 0 0 20,586
Other revenues, net 494 (5,607) (2,161) (7,274)
-------- ------- -------- --------
Total noninterest
revenues 53,598 (5,607) (2,161) 45,830
Expenses:
Operating expenses 42,286 525 1,305 44,116
Minority interest
in income of
consolidated
subsidiary 0 0 2,220 2,220
Unusual charges (B) 0 0 1,000 1,000
-------- ------- -------- --------
Total expenses 42,286 525 4,525 47,336
-------- ------- -------- --------
Income (loss) before
income taxes 14,243 (6,551) (10,865) (3,173)
Income tax expense
(benefit) 5,483 (2,522) (2,961) 0
-------- ------- -------- --------
Income (loss) from
continuing operations 8,760 (4,029) (7,904) (3,173)
Loss, net, on
discontinuance of
mortgage
and leasing
businesses, net of tax 0 0 (4,000) (4,000)
-------- ------- -------- --------
Net income (loss) $ 8,760 $(4,029) $(11,904) $ (7,173)
======== ======= ======== ========
(A) Other includes insurance operations, investment and other
activities not attributable to other segments.
(B) Includes severance, outplacement and other compensation costs
associated with restructuring our corporate functions commensurate
with the ongoing businesses as well as expenses associated with
exited businesses and asset impairments.
Advanta Corp.
Supplemental Non-GAAP Disclosure
Managed Income Statement (A)
(in thousands)
Three Months Ended
June 30, 2001
----------------------------------------------------------------------
Advanta Venture
Business Cards Capital Other (D) Total
---------- -------- --------- ----------
Interest income $ 92,708 $ 2 $13,721 $106,431
Interest expense 26,433 421 17,700 44,554
---------- -------- --------- ----------
Net interest
income 66,275 (419) (3,979) 61,877
Provision for
credit losses
(B) 36,363 0 200 36,563
---------- -------- --------- ----------
Net interest
income after
provision for
credit losses 29,912 (419) (4,179) 25,314
Noninterest
revenues:
Interchange
income 20,586 0 0 20,586
Other revenues,
net 6,031 (5,607) (2,161) (1,737)
---------- -------- --------- ----------
Total noninterest
revenues 26,617 (5,607) (2,161) 18,849
Expenses:
Operating
expenses 42,286 525 1,305 44,116
Minority
interest in
income of
consolidated
subsidiary 0 0 2,220 2,220
Unusual charges
(C) 0 0 1,000 1,000
---------- -------- --------- ----------
Total expenses 42,286 525 4,525 47,336
---------- -------- --------- ----------
Income (loss)
before income
taxes 14,243 (6,551) (10,865) (3,173)
Income tax
expense (benefit) 5,483 (2,522) (2,961) 0
---------- -------- --------- ----------
Income (loss)
from continuing
operations 8,760 (4,029) (7,904) (3,173)
Loss, net, on
discontinuance of
mortgage and
leasing
businesses, net
of tax 0 0 (4,000) (4,000)
---------- -------- --------- ----------
Net income (loss) $ 8,760 $(4,029) $(11,904) $ (7,173)
========== ======== ========= ==========
(A) We analyze the financial performance of Advanta Business Cards on
a managed receivable portfolio basis. To do so, we adjust the
Advanta Business Cards income statement to reverse the effects of
securitization. Our managed business credit card receivable
portfolio is comprised of owned and securitized business credit
card receivables.
(B) 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 been equal to actual reported charge-offs.
(C) Includes severance, outplacement and other compensation costs
associated with restructuring our corporate functions commensurate
with the ongoing businesses as well as expenses associated with
exited businesses and asset impairments.
(D) Other includes insurance operations, investment and other
activities not attributable to other segments.
Advanta Corp.
Highlights
(in thousands, except per share data)
Three Months Ended Percent Change
from
------------------------------------ -----------------
June 30, March 31, June 30, Prior Prior
EARNINGS 2001 2001 2000 Quarter Year
----------------------------------------------------------------------
Gross revenues $78,666 $64,003 $74,669 22.9% 5.4%
Basic income
(loss) from
continuing
operations
per common
share (0.12) (1.48) 0.70 -91.9 -117.1
Diluted income
(loss) from
continuing
operations
per common
share (0.12) (1.48) 0.70 -91.9 -117.1
Basic net
income (loss)
per common
share (0.28) (1.17) (7.64) -76.1 -96.3
Diluted net
income (loss)
per common
share (0.28) (1.17) (7.59) -76.1 -96.3
Return on
average
common equity (6.90)% (27.10)% (142.13)% -74.5 -95.1
Net income per
common share
from
continuing
business
segments (A) $0.32 $0.29 N/M 10.3 N/M
COMMON STOCK DATA
----------------------------------------------------------------------
Weighted
average
common shares
used to
compute:
Basic earnings
per common
share 25,842 25,303 25,232 2.1% 2.4%
Diluted
earnings per
common share 25,842 25,303 25,404 2.1 1.7
Ending shares
outstanding 27,325 27,274 27,237 0.2 0.3
Stock price:
Class A
High $16.000 $16.000 $21.000 0.0 -23.8
Low 12.860 8.750 10.875 47.0 18.3
Closing 16.000 15.813 12.188 1.2 31.3
Class B
High 14.000 14.000 15.125 0.0 -7.4
Low 11.900 7.156 7.750 66.3 53.5
Closing 13.970 13.688 8.500 2.1 64.4
Cash dividends
declared
Class A 0.063 0.063 0.063 0.0 0.0
Class B 0.076 0.076 0.076 0.0 0.0
Book value per
common share
(B) 15.63 16.05 16.08 -2.6 -2.8
BUSINESS CREDIT CARDS
----------------------------------------------------------------------
Origination
volume $1,093,457 $1,003,735 $900,381 8.9% 21.4 %
Securitization
volume 114,750 100,000 0 14.8 N/M
Average
managed
receivables 1,848,424 1,691,479 1,319,434 9.3 40.1
Ending managed
receivables 1,899,304 1,781,005 1,428,732 6.6 32.9
Managed net
interest
margin 14.34% 13.75% 12.33% 4.3 16.3
As a percentage
of gross
managed
receivables:
Total loans
30 days or
more
delinquent 5.79 5.20 3.70 11.3 56.5
Net
charge-offs 7.44 6.50 3.84 14.5 93.8
(A) Includes net income of the Advanta Business Cards segment and
expenses of the venture capital segment.
(B) Based on shares outstanding.
- Statistical Supplement Available at www.advanta.com - |
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