Advanta Reports Strong Second Quarter Results and Increases Full Year 2006 Guidance; Substantial Receivable Growth and Record Transaction Volume.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 second quarter 2006 net income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $23.0 million or $0.79 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. Advanta Business Cards earned net income of $23.0 million compared to $13.6 million for second quarter 2005. "I am happy to report another excellent quarter for the Company as demonstrated by outstanding earnings, substantial portfolio and transaction volume, and the continued strong credit performance of our customers," 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. . "As a result, we are increasing our guidance for 2006 full year earnings from continuing operations to a range of $2.60 to $2.70 per combined diluted share. Our success is founded in our focused strategy of acquiring and retaining high credit quality customers, and we believe we are well positioned to grow the business and our earnings into the future. We expected very strong results for 2006 but what we are seeing is substantially exceeding those expectations." For full year 2006, the Company anticipates growth in owned and 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 in the range of 20% to 30%, with transaction volume increasing 20% to 25%. In addition, the Company plans on investing more in acquisition and marketing activities which should result in new account growth in 2006 to be 45% to 50% higher than full year 2005 new account growth. "We believe that investing in this growth will benefit Advanta in future years and we will continue to produce very strong results for 2006," said Mr. Alter. Consistent with prior periods, the earnings per share estimate assumes no venture capital investment gains or losses as such amounts are based on future market conditions which cannot be reliably forecasted. Details of the 2006 second quarter results for Advanta Business Cards include ending managed receivables of $4.4 billion, reflecting growth of 25% over the $3.5 billion reported at June June: see month. 30, 2005. Owned Business Cards receivables were $1.1 billion at June 30, 2006, reflecting growth of 28% over the $829 million reported at June 30, 2005. Transaction volume reached record levels for the quarter at $3.0 billion, exceeding second quarter 2005 volume by 24%. 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. 27, at 9:00 a.m. Eastern time to review second quarter results and expectations for full year 2006. The call can be accessed by dialing 719-457-2680 and referring to pass code 1711364. The call will also be webcast simultaneously si·mul·ta·ne·ous adj. 1. Happening, existing, or done at the same time. See Synonyms at contemporary. 2. Mathematics via a Vcall link on the Company's website, www.advanta.com, or at www.vcall.com. Those interested in listening to the webcast should go to the website at least fifteen minutes before the call to register and 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. any necessary software. Replays of the call will be available beginning at noon today on 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 at www.advanta.com or www.vcall.com or by dialing 719-457-0820 and referring to confirmation code 1711364. 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 the press releases or the statistical supplements available at www.advanta.com in the "Corporate Info INFO Information INFO Information (logging abbreviation) INFO Inform(ed/ation) INFO Ionic Difluoroamino Oxidizer " section. 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 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 materially from those projected. The most significant among these risks and uncertainties are: (1) the Company's managed net interest income including changes resulting from fluctuations in the volume of receivables and the range and timing of pricing offers to cardholders; (2) competitive pressures, including product development and pricing, among financial institutions; (3) political conditions, social conditions, monetary and fiscal policies and general economic and other environmental conditions that affect the level of new account originations, customer spending, delinquencies and charge-offs; (4) factors affecting fluctuations in the number of accounts or receivable balances, including the retention of cardholders after promotional pricing periods have expired ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. ; (5) interest rate fluctuations; (6) the level of expenses; (7) the timing of the securitizations of the Company's receivables; (8) the effects of government regulation, including restrictions and limitations imposed by banking laws, regulators and examinations; (9) effect of, and changes in, tax laws, rates, regulations and policies; (10) effect of legal and regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. developments, including changes in bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most laws and regulations and the ultimate resolution of the industry-related judicial proceedings judicial proceedings n. any action by a judge re: trials, hearings, petitions, or other matters formally before the court. (See: judicial) relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the legality le·gal·i·ty n. pl. le·gal·i·ties 1. The state or quality of being legal; lawfulness. 2. Adherence to or observance of the law. 3. A requirement enjoined by law. Often used in the plural. of certain interchange An interchange is a location where two things meet, usually perform some kind of exchange, and possibly go on their ways again. It is most commonly used in four contexts:
Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ; (16) 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. , including judgments, settlements and actual or anticipated insurance recoveries for costs or judgments; (17) the proper design and operation of the Company's disclosure controls and procedures; and (18) 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. . 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, 2006
----------------------------------------------------------------------
Advanta
Business
Cards Other (A) Total
---------- ---------- ----------
Interest income $ 34,450 $ 6,061 $ 40,511
Interest expense 10,400 7,079 17,479
---------- ---------- ----------
Net interest income 24,050 (1,018) 23,032
Provision for credit losses 10,145 0 10,145
---------- ---------- ----------
Net interest income after provision
for credit losses 13,905 (1,018) 12,887
Noninterest revenues:
Interchange income 51,217 0 51,217
Securitization income 29,686 0 29,686
Servicing revenues 15,329 0 15,329
Business credit card rewards (16,295) 0 (16,295)
Other revenues, net 6,167 1,208 7,375
---------- ---------- ----------
Total noninterest revenues 86,104 1,208 87,312
Operating expenses 62,545 191 62,736
---------- ---------- ----------
Income (loss) before income taxes 37,464 (1) 37,463
Income tax expense 14,423 0 14,423
---------- ---------- ----------
Income (loss) from continuing
operations 23,041 (1) 23,040
Gain on discontinuance of mortgage
and leasing businesses, net of tax 0 738 738
---------- ---------- ----------
Net income $ 23,041 $ 737 $ 23,778
========== ========== ==========
Three Months Ended
June 30, 2005
----------------------------------------------------------------------
Advanta
Business
Cards Other (A) Total
---------- ---------- ----------
Interest income $ 26,640 $ 4,205 $ 30,845
Interest expense 7,884 5,834 13,718
---------- ---------- ----------
Net interest income 18,756 (1,629) 17,127
Provision for credit losses 8,603 0 8,603
---------- ---------- ----------
Net interest income after provision
for credit losses 10,153 (1,629) 8,524
Noninterest revenues:
Interchange income 40,738 0 40,738
Securitization income 30,066 0 30,066
Servicing revenues 12,819 0 12,819
Business credit card rewards (12,779) 0 (12,779)
Other revenues, net 3,278 3,182 6,460
---------- ---------- ----------
Total noninterest revenues 74,122 3,182 77,304
Operating expenses 61,920 331 62,251
---------- ---------- ----------
Income before income taxes 22,355 1,222 23,577
Income tax expense 8,718 477 9,195
---------- ---------- ----------
Income from continuing operations 13,637 745 14,382
Gain on discontinuance of mortgage
and leasing businesses, net of tax 0 3,965 3,965
---------- ---------- ----------
Net income $ 13,637 $ 4,710 $ 18,347
========== ========== ==========
(A) Other includes venture capital operations as well as investment
and other activities not attributable to the Advanta Business Card
segment.
ADVANTA
HIGHLIGHTS
(in thousands, except per share data)
Three Months Ended Percent Change From
----------------------------
June 30, Mar. 31, June 30, Prior Prior
EARNINGS 2006 2006 2005 Quarter Year
----------------------------------------------------------------------
Basic income from
continuing
operations per
common share:
Class A $ 0.84 $ 0.79 $ 0.53 6.3% 58.5%
Class B 0.87 0.82 0.56 6.1 55.4
Combined (A) 0.86 0.81 0.55 6.2 56.4
Diluted income from
continuing
operations per
common share:
Class A 0.78 0.73 0.49 6.8 59.2
Class B 0.79 0.74 0.50 6.8 58.0
Combined (A) 0.79 0.73 0.50 8.2 58.0
Basic net income per
common share:
Class A 0.86 0.79 0.68 8.9 26.5
Class B 0.90 0.82 0.71 9.8 26.8
Combined (A) 0.89 0.81 0.70 9.9 27.1
Diluted net income
per common share:
Class A 0.81 0.73 0.63 11.0 28.6
Class B 0.81 0.74 0.64 9.5 26.6
Combined (A) 0.81 0.73 0.64 11.0 26.6
Return on average
common equity 17.99% 16.63% 15.22% 8.2 18.2
COMMON STOCK DATA
----------------------------------------------------------------------
Weighted average
common shares used
to compute:
Basic earnings per
common share
Class A 8,854 8,846 8,821 0.1% 0.4%
Class B 17,945 18,107 17,433 (0.9) 2.9
--------- --------- ---------
Total 26,799 26,953 26,254 (0.6) 2.1
Diluted earnings
per common share
Class A 8,854 8,846 8,821 0.1 0.4
Class B 20,459 20,876 20,013 (2.0) 2.2
--------- --------- ---------
Total 29,313 29,722 28,834 (1.4) 1.7
Ending shares
outstanding:
Class A 9,607 9,607 9,607 0.0 0.0
Class B 17,865 18,890 18,611 (5.4) (4.0)
--------- --------- ---------
Total 27,472 28,497 28,218 (3.6) (2.6)
Stock price:
Class A
High $ 38.24 $ 34.74 $ 27.19 10.1 40.6
Low 31.52 28.82 20.49 9.4 53.8
Closing 32.79 34.09 25.89 (3.8) 26.7
Class B
High 41.74 37.44 29.44 11.5 41.8
Low 34.50 30.84 22.48 11.9 53.5
Closing 35.95 36.87 28.16 (2.5) 27.7
Cash dividends
declared:
Class A 0.2125 0.1134 0.1134 87.4 87.4
Class B 0.2550 0.1361 0.1361 87.4 87.4
Book value per
common share 19.53 19.44 18.40 0.5 6.1
(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)
Percent Change
Three Months Ended From
-----------------------------------
June 30, Mar. 31, June 30, Prior Prior
2006 2006 2005 Quarter Year
---------------------------------------------------
New account
originations 86,398 82,617 70,044 4.6% 23.3%
Average number of
active accounts
(A) 687,912 649,384 589,751 5.9 16.6
Ending number of
accounts 978,517 921,841 822,773 6.1 18.9
Transaction volume $3,031,493 $2,733,922 $2,446,510 10.9 23.9
Securitization
volume increase
excluding
replenishment
sales $ 275,000 $ 165,000 $ 120,000 66.7 129.2
Average
receivables:
Owned $ 997,754 $ 929,795 $ 727,253 7.3 37.2
Securitized 3,222,380 2,957,309 2,707,045 9.0 19.0
----------- ----------- -----------
Managed (B) 4,220,134 3,887,104 3,434,298 8.6 22.9
Ending
receivables:
Owned $1,062,249 $ 982,251 $ 828,724 8.1 28.2
Securitized 3,323,869 3,045,600 2,685,504 9.1 23.8
----------- ----------- -----------
Managed (B) 4,386,118 4,027,851 3,514,228 8.9 24.8
----------------------------------------------------------------------
CREDIT QUALITY -
OWNED
------------------
Receivables 30
days or more
delinquent $ 25,482 $ 26,335 $ 26,085
Receivables 90
days or more
delinquent 12,560 11,637 12,798
As a percentage of
gross
receivables:
Receivables 30
days or more
delinquent 2.40% 2.68% 3.15% (10.4)% (23.8)%
Receivables 90
days or more
delinquent 1.18 1.18 1.54 0.0 (23.4)
Net principal
charge-offs:
Amount $ 7,520 $ 8,084 $ 8,603
As a percentage
of average
gross
receivables
(annualized) 3.01% 3.48% 4.73% (13.5) (36.4)
CREDIT QUALITY -
SECURITIZED
------------------
Receivables 30
days or more
delinquent $ 90,987 $ 91,029 $ 100,283
Receivables 90
days or more
delinquent 45,008 40,131 49,583
As a percentage of
gross
receivables:
Receivables 30
days or more
delinquent 2.74% 2.99% 3.73% (8.4)% (26.5)%
Receivables 90
days or more
delinquent 1.35 1.32 1.85 2.3 (27.0)
Net principal
charge-offs:
Amount $ 26,633 $ 27,095 $ 38,324
As a percentage
of average
gross
receivables
(annualized) 3.31% 3.66% 5.66% (9.6) (41.5)
CREDIT QUALITY -
MANAGED (B)
------------------
Receivables 30
days or more
delinquent $ 116,469 $ 117,364 $ 126,368
Receivables 90
days or more
delinquent 57,568 51,768 62,381
As a percentage of
gross
receivables:
Receivables 30
days or more
delinquent 2.66% 2.91% 3.60% (8.6)% (26.1)%
Receivables 90
days or more
delinquent 1.31 1.29 1.78 1.6 (26.4)
Net principal
charge-offs:
Amount $ 34,153 $ 35,179 $ 46,927
As a percentage
of average
gross
receivables
(annualized) 3.24% 3.62% 5.47% (10.5) (40.8)
(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 to investors 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.
ADVANTA
RECONCILIATION OF FORWARD-LOOKING NON-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 believe that performance on a managed basis provides
useful supplemental information to investors 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. Credit data on the managed portfolio provides
additional information useful in understanding the performance of the
retained interests in securitizations.
The data below provides reconciliations of forward-looking managed
receivables and managed net principal charge-offs as a percentage of
average managed receivables (non-GAAP financial measures) to owned
receivables and owned net principal charge-offs as a percentage of
average owned receivables (the most directly comparable GAAP financial
measures). In the forward-looking business credit card credit data
below, the Low End of Range column assumes the forward-looking average
receivable balances multiplied by our Low End of Range charge-off rate
expectations, and the High End of Range column assumes the
forward-looking average receivable balances multiplied by our High End
of Range charge-off rate expectations. The data presented below
depicts only certain possibilities out of a large set of possible
scenarios.
Forward-
Looking
Business Ending Projected Estimate at December 31, 2006
Credit Card Balance at ---------------------------------------------
Receivable Dec. 31, Low End Percentage High End Percentage
Balances: 2005 of Range Increase of Range Increase
----------- ----------- ---------- ----------- ----------
Owned $ 879,468 $1,055,000 20% $1,143,000 30%
Securitized 2,880,401 3,457,000 20% 3,745,000 30%
----------- ----------- -----------
Managed $3,759,869 $4,512,000 20% $4,888,000 30%
Forward-Looking Average
Business Credit Year Ended
Card Receivable December 31,
Balances: 2006
------------
Owned $ 1,022,000
Securitized 3,277,000
------------
Managed $ 4,299,000
Year Ended
December 31, 2006
------------------------
Forward-Looking
Business Credit Card Low End High End
Credit Data: of Range of Range
----------- ------------
Owned net principal
charge-offs $ 33,900 $ 36,000
As a percentage of
average
receivables 3.32% 3.52%
Securitized net
principal charge-
offs $ 116,600 $ 123,100
As a percentage of
average
receivables 3.56% 3.76%
Managed net
principal charge-
offs $ 150,500 $ 159,100
As a percentage of
average
receivables 3.50% 3.70%
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion