Advanta Reports Second Quarter 2005 Results; Advanta Business Cards Earnings Increase 25%; Transaction Volume Reaches Record Level.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 $13.6 million for second quarter 2005, an increase of 25% as compared to $10.9 million for second quarter 2004. "This was a strong quarter for Advanta Business Cards in every measure," 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. . "For the quarter, income was at record levels and our customers used our cards at record levels. Account and receivable growth were robust and asset quality remains strong. We continued to enjoy ongoing opportunities in the small business marketplace." 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 second quarter 2005 of $18.3 million or $0.64 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 $11.0 million or $0.41 per combined diluted share for second quarter 2004. Consolidated net income for second quarter 2005 includes a $0.03 per combined diluted share asset valuation gain associated with the Company's venture capital portfolio and a $0.14 per combined diluted share 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. . Consolidated net income for second quarter 2004 includes a $0.01 per combined diluted share net gain on discontinued operations. Advanta Business Cards' results for second quarter 2005 reflect a 152 basis point decline in net principal charge-offs 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 to 5.47% 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 6.99% for second quarter 2004. Over 30 day delinquencies on managed receivables declined 120 basis points to 3.60% and over 90 day delinquencies on managed receivables decreased 72 basis points to 1.78%, each as compared to second quarter 2004. Business Cards ended the quarter with managed receivables of $3.5 billion as compared to $3.1 billion at June June: see month. 30, 2004. Net principal charge-offs on average owned receivables decreased 202 basis points to 4.73% on an annualized basis for second quarter 2005, as compared to 6.75% for second quarter 2004. Over 30 day delinquencies on owned receivables declined 149 basis points to 3.15% and over 90 day delinquencies on owned receivables decreased 88 basis points to 1.54%, each as compared to second quarter 2004. Owned Business Card receivables were $829 million at June 30, 2005 as compared to $550 million at June 30, 2004. 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, July July: see month. 26, 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 1616748. 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 and business professionals 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 the non-GAAP financial measures used to manage 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
June 30, 2005
----------------------------------------------------------------------
Advanta
Business Venture
Cards Capital Other(A) Total
------------ -------- --------- --------
Interest income $ 26,640 $ 1 $ 4,204 $30,845
Interest expense 7,884 34 5,800 13,718
------------ -------- --------- --------
Net interest income 18,756 (33) (1,596) 17,127
Provision for credit losses 8,603 0 0 8,603
------------ -------- --------- --------
Net interest income after
provision for credit losses 10,153 (33) (1,596) 8,524
Noninterest revenues:
Interchange income 40,738 0 0 40,738
Securitization income 30,066 0 0 30,066
Servicing revenues 12,819 0 0 12,819
Business credit card
rewards (12,779) 0 0 (12,779)
Other revenues, net 3,278 1,256 1,926 6,460
------------ -------- --------- --------
Total noninterest revenues 74,122 1,256 1,926 77,304
Operating expenses 61,920 1 330 62,251
------------ -------- --------- --------
Income before income taxes 22,355 1,222 0 23,577
Income tax expense 8,718 477 0 9,195
------------ -------- --------- --------
Income from continuing
operations 13,637 745 0 14,382
Gain on discontinuance of
mortgage and leasing
businesses, net of tax 0 0 3,965 3,965
------------ -------- --------- --------
Net income $ 13,637 $ 745 $ 3,965 $18,347
============ ======== ========= ========
Three Months Ended
June 30, 2004
----------------------------------------------------------------------
Advanta
Business Venture
Cards Capital Other(A) Total
------------ -------- --------- --------
Interest income $ 23,735 $ 0 $ 1,499 $25,234
Interest expense 8,590 86 2,170 10,846
------------ -------- --------- --------
Net interest income 15,145 (86) (671) 14,388
Provision for credit losses 10,654 0 (160) 10,494
------------ -------- --------- --------
Net interest income after
provision for credit losses 4,491 (86) (511) 3,894
Noninterest revenues:
Interchange income 35,513 0 0 35,513
Securitization income 32,627 0 0 32,627
Servicing revenues 12,499 0 0 12,499
Business credit card
rewards (10,228) 0 0 (10,228)
Other revenues, net 2,704 0 790 3,494
------------ -------- --------- --------
Total noninterest revenues 73,115 0 790 73,905
Operating expenses 59,608 9 279 59,896
------------ -------- --------- --------
Income (loss) before income
taxes 17,998 (95) 0 17,903
Income tax expense (benefit) 7,109 (38) 0 7,071
------------ -------- --------- --------
Income (loss) from continuing
operations 10,889 (57) 0 10,832
Gain, net, on discontinuance
of mortgage and leasing
businesses, net of tax 0 0 160 160
------------ -------- --------- --------
Net income (loss) $ 10,889 $ (57) $ 160 $10,992
============ ======== ========= ========
(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
receivable 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 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
-----------------------
June 30, June 30,
2005 2004
----------- -----------
Interest income $ 123,696 $ 115,781
Interest expense 31,989 19,963
----------- -----------
Net interest income 91,707 95,818
Provision for credit losses 46,927 55,294
----------- -----------
Net interest income after provision for credit
losses 44,780 40,524
Noninterest revenues 39,495 37,082
----------- -----------
Risk-adjusted revenues (A) 84,275 77,606
Operating expenses 61,920 59,608
----------- -----------
Income before income taxes 22,355 17,998
Income tax expense 8,718 7,109
----------- -----------
Net income $ 13,637 $ 10,889
=========== ===========
Average managed business credit card
receivables $3,434,298 $3,116,466
(A) Risk-adjusted revenues represent net interest income and
noninterest revenues, less provision for credit losses.
ADVANTA
HIGHLIGHTS
(in thousands, except per share data)
Three Months Ended Percent
------------------------- Change From
June Mar. June
30, 31, 30, Prior Prior
EARNINGS 2005 2005 2004 Quarter Year
----------------------------------------------------------------------
Basic income from continuing
operations per common share:
Class A $ 0.53 $ 2.82 $ 0.42 (81.2)% 26.2%
Class B 0.56 2.85 0.44 (80.4) 27.3
Combined (A) 0.55 2.84 0.43 (80.6) 27.9
Diluted income from
continuing operations per
common share:
Class A 0.49 2.54 0.39 (80.7) 25.6
Class B 0.50 2.55 0.40 (80.4) 25.0
Combined (A) 0.50 2.55 0.40 (80.4) 25.0
Basic net income per common
share:
Class A 0.68 2.82 0.42 (75.9) 61.9
Class B 0.71 2.85 0.45 (75.1) 57.8
Combined (A) 0.70 2.84 0.44 (75.4) 59.1
Diluted net income per common
share:
Class A 0.63 2.54 0.40 (75.2) 57.5
Class B 0.64 2.55 0.41 (74.9) 56.1
Combined (A) 0.64 2.55 0.41 (74.9) 56.1
Return on average common
equity 15.22% 67.30% 12.21% (77.4) 24.7
COMMON STOCK DATA
----------------------------------------------------------------------
Weighted average common
shares used to compute:
Basic earnings per common
share
Class A 8,821 8,812 8,794 0.1% 0.3%
Class B 17,433 16,705 16,172 4.4 7.8
------- ------- -------
Total 26,254 25,517 24,966 2.9 5.2
Diluted earnings per
common share
Class A 8,821 8,812 8,794 0.1 0.3
Class B 20,013 19,670 18,329 1.7 9.2
------- ------- -------
Total 28,834 28,482 27,123 1.2 6.3
Ending shares outstanding
Class A 9,607 9,607 9,607 0.0 0.0
Class B 18,611 18,399 18,093 1.2 2.9
------- ------- -------
Total 28,218 28,006 27,700 0.8 1.9
Stock price:
Class A
High $ 27.19 $ 22.80 $ 23.21 19.3 17.1
Low 20.49 20.23 15.43 1.3 32.8
Closing 25.89 20.80 21.93 24.5 18.1
Class B
High 29.44 24.70 24.12 19.2 22.1
Low 22.48 21.84 15.13 2.9 48.6
Closing 28.16 23.00 22.92 22.4 22.9
Cash dividends declared:
Class A 0.113 0.095 0.095 20.0 20.0
Class B 0.136 0.113 0.113 20.0 20.0
Book value per common share 18.40 17.72 14.28 3.8 28.9
(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
June 30, Mar. 31, June 30, Prior Prior
2005 2005 2004 Quarter Year
---------------------------------------------------
New account
originations 70,044 44,781 26,187 56.4% 167.5%
Average number of
active accounts
(A) 589,751 577,301 585,519 2.2 0.7
Ending number of
accounts 822,773 786,967 780,415 4.5 5.4
Transaction volume $2,446,510 $2,176,809 $1,994,647 12.4 22.7
Securitization
volume increase
excluding
replenishment
sales $ 120,000 $ 0 $ 0 N/M N/M
Average managed
receivables:
Owned $ 727,253 $ 779,176 $ 583,581 (6.7) 24.6
Securitized 2,707,045 2,548,739 2,532,885 6.2 6.9
---------- ---------- ----------
Managed (B) 3,434,298 3,327,915 3,116,466 3.2 10.2
Ending managed
receivables:
Owned $ 828,724 $ 783,916 $ 549,862 5.7 50.7
Securitized 2,685,504 2,565,085 2,546,777 4.7 5.4
---------- ---------- ----------
Managed (B) 3,514,228 3,349,001 3,096,639 4.9 13.5
----------------------------------------------------------------------
CREDIT QUALITY -
OWNED
------------------
Receivables 30
days or more
delinquent $ 26,085 $ 27,507 $ 25,493
Receivables 90
days or more
delinquent 12,798 12,775 13,309
As a percentage of
gross
receivables:
Receivables 30
days or more
delinquent 3.15% 3.51% 4.64% (10.3)%(32.1)%
Receivables 90
days or more
delinquent 1.54 1.63 2.42 (5.5) (36.4)
Net principal
charge-offs:
Amount $ 8,603 $ 10,419 $ 9,854
As a percentage
of average
gross
receivables
(annualized) 4.73% 5.35% 6.75% (11.6) (29.9)
CREDIT QUALITY -
SECURITIZED
------------------
Receivables 30
days or more
delinquent $ 100,283 $ 110,069 $ 123,123
Receivables 90
days or more
delinquent 49,583 51,318 63,980
As a percentage of
gross
receivables:
Receivables 30
days or more
delinquent 3.73% 4.29% 4.83% (13.1)%(22.8)%
Receivables 90
days or more
delinquent 1.85 2.00 2.51 (7.5) (26.3)
Net principal
charge-offs:
Amount $ 38,324 $ 35,270 $ 44,640
As a percentage
of average
gross
receivables
(annualized) 5.66% 5.54% 7.05% 2.2 (19.7)
CREDIT QUALITY -
MANAGED (B)
------------------
Receivables 30
days or more
delinquent $ 126,368 $ 137,576 $ 148,616
Receivables 90
days or more
delinquent 62,381 64,093 77,289
As a percentage of
gross
receivables:
Receivables 30
days or more
delinquent 3.60% 4.11% 4.80% (12.4)%(25.0)%
Receivables 90
days or more
delinquent 1.78 1.91 2.50 (6.8) (28.8)
Net principal
charge-offs:
Amount $ 46,927 $ 45,689 $ 54,494
As a percentage
of average
gross
receivables
(annualized) 5.47% 5.49% 6.99% (0.4) (21.7)
(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 are 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 securitizations.
Three Months Ended
June 30, 2005
--------------------------------------
Advanta Advanta
Business Business
Cards Securitization Cards
GAAP Adjustments Managed
---------- -------------- -----------
INCOME STATEMENT MEASURES
Interest income $ 26,640 $ 97,056 $ 123,696
Interest expense 7,884 24,105 31,989
Net interest income 18,756 72,951 91,707
Interchange income 40,738 0 40,738
Securitization income 30,066 (30,066) 0
Servicing revenues 12,819 (12,819) 0
Business credit card rewards (12,779) 0 (12,779)
Other revenues, net 3,278 8,258 11,536
Total noninterest revenues 74,122 (34,627) 39,495
Provision for credit losses 8,603 38,324 (A) 46,927
---------------------------------------
BALANCE SHEET MEASURES
Average business credit card
receivables 727,253 2,707,045 3,434,298
Ending business credit card
receivables 828,724 2,685,504 3,514,228
Business credit card
receivables:
30 days or more delinquent 26,085 100,283 126,368
90 days or more delinquent 12,798 49,583 62,381
Net principal charge-offs 8,603 38,324 46,927
Three Months Ended
June 30, 2004
--------------------------------------
Advanta Advanta
Business Business
Cards Securitization Cards
GAAP Adjustments Managed
---------- -------------- -----------
INCOME STATEMENT MEASURES
Interest income $ 23,735 $ 92,046 $ 115,781
Interest expense 8,590 11,373 19,963
Net interest income 15,145 80,673 95,818
Interchange income 35,513 0 35,513
Securitization income 32,627 (32,627) 0
Servicing revenues 12,499 (12,499) 0
Business credit card rewards (10,228) 0 (10,228)
Other revenues, net 2,704 9,093 11,797
Total noninterest revenues 73,115 (36,033) 37,082
Provision for credit losses 10,654 44,640 (A) 55,294
--------------------------------------
BALANCE SHEET MEASURES
Average business credit card
receivables 583,581 2,532,885 3,116,466
Ending business credit card
receivables 549,862 2,546,777 3,096,639
Business credit card
receivables:
30 days or more delinquent 25,493 123,123 148,616
90 days or more delinquent 13,309 63,980 77,289
Net principal charge-offs 9,854 44,640 54,494
(A) Includes the amount by which 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.
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