Advanta Reports First Quarter 2009 Results (Business Wire)
Thu, 30 Apr 2009 11:30:00 Etc/GM
Noteworthy activity and details for the first quarter, compared to the fourth quarter of 2008, include:
- Cash and liquid investments totaled $2.2 billion at the end of the quarter or 47% of owned and securitized receivables.
- Advanta Bank Corp. total risk-based and Tier 1 capital ratios of 21.8% and 19.7%, respectively, continue to be significantly above required ratios to be considered well capitalized.
- Advanta Corp. equity together with subordinated debt for trust preferred securities to managed receivables decreased slightly to 11.3% and to owned receivables decreased to 96.6%.
- A retained interests in securitizations valuation charge of $17.6 million was recorded to increase the discount rates on these assets associated with recent trust performance trends and downgrades.
- The allowance for receivable losses increased to 21.6% of Business Cards owned receivables at quarter end, after building reserves for credit losses on principal receivables by $14.6 million.
- Business Cards ending managed receivables decreased to $4.7 billion with owned receivables increasing to $549 million.
- Business Cards managed net interest yield declined to 11.19% and owned net interest yield declined to 1.62%.
- Customer transaction volume declined to $2.5 billion.
- Business Cards managed net credit loss rate rose to 15.9% and the owned net credit loss rate rose to 20.1%. The managed and owned 12 month lagged net credit loss rates were 12.2% and 10.7%, respectively.
Also, Advanta Capital Trust I has $100 million of trust preferred securities which are backed by the Company’s junior subordinated long term debt. The Company expects to make a tender offer for all of the trust preferred securities. The securities have recently traded at under 10% of face value and the tender price will be related to those trades. The Company’s purchase and retirement of these securities would increase the Company’s stockholders’ equity and reduce future expenses. The terms of the trust preferred securities provide that semi-annual payments on the securities can be deferred at the Company’s election and that no payments of dividends can be made on the Company's common or preferred stocks during the deferral period. The Company has elected to defer payments on the trust preferred securities and to suspend payment of common and preferred dividends, which were largely curtailed earlier in the year.
Conference Call Details
Advanta management will hold a conference call with analysts and institutional investors today, April 30, at 9:00 a.m. Eastern Time, to review this news. The call can be accessed by dialing 800-533-9703 and referring to confirmation code 9183497. At the same time, the call will be webcast via a Vcall link on Advanta’s website or at www.investorcalendar.com. Those interested in listening to the webcast should go to the website at least ten minutes before the call to register and download any necessary software. Beginning at about 11:00 this morning, a replay of the call will be available on the Internet at the same sites as the original webcast. The conference call may include a discussion of non-GAAP financial measures, which are reconciled to the most directly comparable GAAP financial measures in the Company’s press releases or the statistical supplements also available on the Company’s website.
About Advanta
Advanta is one of the nation’s largest credit card issuers (through Advanta Bank Corp.) in the small business market today. Advanta’s exclusive focus on this market as well as its size, experience, and commitment to developing meaningful product offerings and a high level of service tailored to the needs of small businesses differentiates the company from other issuers. Founded in 1951, Advanta has long been an innovator in developing and introducing many of the marketing techniques that are common in the financial services industry today. Learn more about Advanta at www.advanta.com.
This Press Release contains forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ from those projected. The most significant of these risks and uncertainties are: (1) political conditions, social conditions, monetary and fiscal policies and general economic and other environmental conditions, including the impact of the ongoing disruption in the capital markets and deterioration of the U.S. economy, as well as the potential for further deterioration and disruption, and the impact of these factors on customer spending, delinquencies, charge-offs, the value of and ability to realize expected returns on investments, and other results of operations; (2) interest rate and credit spread fluctuations; (3) factors affecting the Company’s level of costs and expenses including difficulties achieving expected operating cost reductions due to, among other things, changes in personnel and changes in plans for implementation of outsourcing initiatives; (4) factors affecting the Company's level of liquidity, including funding decisions, the potential availability and timing of the securitizations of its receivables and its ability to monetize its investments; (5) government regulation of banking and finance businesses, including the effects of and changes in the level of scrutiny, regulatory requirements and regulatory initiatives, certain mandatory and possibly discretionary action by state and federal regulators, restrictions and limitations imposed by banking laws, regulators, examinations and reviews, and the effects of, and changes in, regulatory policies, guidance, interpretations and initiatives and agreements between the Company and its regulators; (6) effect of legal and regulatory developments relating to the legality of certain business methods, practices and policies of credit card issuers and the ultimate resolution of industry-related judicial proceedings relating to the legality of certain interchange rates; (7) the amount and cost of financing available to the Company; (8) the ratings on the debt of Advanta Corp. and its subsidiaries; (9) the impact of litigation and legal, regulatory, administrative or other claims, investigations or proceedings including judgments, settlements and actual or anticipated insurance recoveries for costs or judgments; and (10) factors impacting the successful execution and completion of the tender offer for the trust preferred securities. 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 and its Quarterly Reports on Form 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 measures and a description of why the non-GAAP financial measures are useful to investors.
| ADVANTA | ||||||||||||
| SEGMENT INCOME STATEMENT - QUARTER | ||||||||||||
| (in thousands) | ||||||||||||
| Three Months Ended | ||||||||||||
| March 31, 2009 | ||||||||||||
| Advanta | ||||||||||||
| Business | ||||||||||||
| Cards | Other (A) | Total | ||||||||||
| Interest income | $ | 28,012 | $ | 6,196 | $ | 34,208 | ||||||
| Interest expense | 25,374 | 5,438 | 30,812 | |||||||||
| Net interest income | 2,638 | 758 | 3,396 | |||||||||
| Provision for credit losses | 41,254 | 23 | 41,277 | |||||||||
| Net interest income (loss) after provision for credit losses | (38,616 | ) | 735 | (37,881 | ) | |||||||
| Noninterest revenues (losses): | ||||||||||||
| Interchange income | 52,526 | 0 | 52,526 | |||||||||
| Securitization income (loss) | (59,907 | ) | 0 | (59,907 | ) | |||||||
| Servicing revenues | 20,847 | 0 | 20,847 | |||||||||
| Business credit card rewards | (17,939 | ) | 0 | (17,939 | ) | |||||||
| Other revenues, net | 1,037 | (577 | ) | 460 | ||||||||
| Total noninterest revenues (losses) | (3,436 | ) | (577 | ) | (4,013 | ) | ||||||
| Operating expenses | 74,754 | 125 | 74,879 | |||||||||
| Pretax income (loss) | $ | (116,806 | ) | $ | 33 | (116,773 | ) | |||||
| Income tax benefit | (40,868 | ) | ||||||||||
| Net loss | $ | (75,905 | ) | |||||||||
| Three Months Ended | ||||||||||||
| March 31, 2008 | ||||||||||||
| Advanta | ||||||||||||
| Business | ||||||||||||
| Cards | Other (A) | Total | ||||||||||
| Interest income | $ | 36,016 | $ | 10,031 | $ | 46,047 | ||||||
| Interest expense | 18,198 | 9,946 | 28,144 | |||||||||
| Net interest income | 17,818 | 85 | 17,903 | |||||||||
| Provision for credit losses | 28,382 | 0 | 28,382 | |||||||||
| Net interest income (loss) after provision for credit losses | (10,564 | ) | 85 | (10,479 | ) | |||||||
| Noninterest revenues: | ||||||||||||
| Interchange income | 65,648 | 0 | 65,648 | |||||||||
| Securitization income | 16,997 | 0 | 16,997 | |||||||||
| Servicing revenues | 26,092 | 0 | 26,092 | |||||||||
| Business credit card rewards | (21,165 | ) | 0 | (21,165 | ) | |||||||
| Other revenues, net | 8,629 | 13,456 | 22,085 | |||||||||
| Total noninterest revenues | 96,201 | 13,456 | 109,657 | |||||||||
| Operating expenses | 74,854 | (5,366 | ) | 69,488 | ||||||||
| Pretax income | $ | 10,783 | $ | 18,907 | 29,690 | |||||||
| Income tax expense | 11,328 | |||||||||||
| Net income | $ | 18,362 | ||||||||||
| ____________________ | ||
| (A) | Other includes investment and other activities not attributable to the Advanta Business Cards segment. In addition, in the three months ended March 31, 2008, noninterest revenues include a $13.4 million gain on the redemption of Visa Inc. shares and operating expenses include the benefit of a $5.5 million decrease in Visa indemnification reserves. | |
| ADVANTA | ||||||||||||||||||
| EARNINGS AND COMMON STOCK DATA | ||||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||||
| Three Months Ended | Percent Change From | |||||||||||||||||
| Mar. 31, | Dec. 31, | Mar. 31, | Prior | Prior | ||||||||||||||
| 2009 | 2008 | 2008 | Quarter | Year | ||||||||||||||
| Basic net income (loss) per common share: | ||||||||||||||||||
| Class A | $ | (1.88) | $ | (1.19) | $ | 0.41 | (58.0) | % | N/M | |||||||||
| Class B | (1.87) | (1.16) | 0.45 | (61.2) | N/M | |||||||||||||
| Diluted net income (loss) per common share: | ||||||||||||||||||
| Class A | $ | (1.88) | $ | (1.19) | $ | 0.41 | (58.0) | % | N/M | |||||||||
| Class B | (1.87) | (1.16) | 0.43 | (61.2) | N/M | |||||||||||||
| Return on average common equity (annualized) | (64.27) | % | (34.70) | % | 12.34 | % |
source: http://biz.yahoo.com/bw/090430/20090430005273.html?.v=1 Add comment© copyright 2006 Finance and money analyses | |||||||||||