Advanta Reports First Quarter 2008 Earnings

Advanta Corp. (NASDAQ: ADVNB; ADVNA) today reported first quarter 2008 net income of $18.4 million or $0.44 per diluted share for Class A and Class B shares combined. Included in the Company’s results was net income not attributable to the Business Cards segment of $11.7 million, or $0.28 per share, related to Visa’s initial public offering. Managed and owned net credit losses for the quarter were 6.43% and 6.53%, respectively. Managed receivables ended the quarter at $6.3 billion while owned receivables totaled almost $1.0 billion. New customers added were just over 67,000, and transaction volume was $3.4 billion. "We are managing the business diligently through this down cycle, with the goal of minimizing risk and improving our results,” said Dennis Alter, Chairman and CEO. "We have strong liquidity, flexible funding options, and the same determination that has moved us through down cycles over the past six decades.” 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 the first quarter results for 2008. The call can be accessed by dialing 877-545-1403 and referring to confirmation code 3854251. The call will also be webcast simultaneously via a Vcall link on the Company’s website, www.advanta.com, or at www.investorcalendar.com. Those interested in listening to the webcast should go to the website at least 10 minutes before the call to register and download any necessary software. Replays of the call will be available beginning at noon today on the Internet at www.advanta.com or www.investorcalendar.com or by dialing 888-203-1112 and referring to pass code 3854251. 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 available at www.advanta.com in the "Corporate Info” section. 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. 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, 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 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   Income before income taxes 10,783 18,907 29,690 Income tax expense 4,114   7,214   11,328   Net income $ 6,669   $ 11,693   $ 18,362     Three Months Ended March 31, 2007   Advanta Business Cards Other (A) Total Interest income $ 40,549 $ 7,806 $ 48,355 Interest expense 13,306   9,256   22,562   Net interest income 27,243 (1,450 ) 25,793 Provision for credit losses 10,083   0   10,083   Net interest income after provision for credit losses 17,160 (1,450 ) 15,710 Noninterest revenues: Interchange income 55,234 0 55,234 Securitization income 23,511 0 23,511 Servicing revenues 20,376 0 20,376 Business credit card rewards (19,332 ) 0 (19,332 ) Other revenues, net 4,537   2,042   6,579   Total noninterest revenues 84,326 2,042 86,368 Operating expenses 66,675   127   66,802   Income before income taxes 34,811 465 35,276 Income tax expense 13,646   182   13,828   Net income $ 21,165   $ 283   $ 21,448   (A)   Other includes venture capital operations as well as 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     2008   2007   2007   Quarter   Year Basic net income per common share: Class A $ 0.42 $ 0.15 $ 0.49 180.0 % (14.3 ) % Class B 0.47 0.20 0.53 135.0 (11.3 ) Combined (A) 0.45 0.18 0.52 150.0 (13.5 ) Diluted net income per common share: Class A $ 0.41 $ 0.15 $ 0.47 173.3 % (12.8 ) % Class B 0.45 0.18 0.48 150.0 (6.2 ) Combined (A) 0.44 0.17 0.48 158.8 (8.3 )   Return on average common equity (annualized) 12.34 % 4.98 % 14.89 % 147.8 % (17.1 ) %   Weighted average common shares used to compute: Basic earnings per common share Class A 13,368 13,356 13,318 0.1 % 0.4 % Class B 27,022 27,149 27,734 (0.5 ) (2.6 ) Total 40,390 40,505 41,052 (0.3 ) (1.6 ) Diluted earnings per common share Class A 13,368 13,356 13,318 0.1 % 0.4 % Class B 28,243 29,396 31,172 (3.9 ) (9.4 ) Total 41,611 42,752 44,490 (2.7 ) (6.5 )   Ending shares outstanding: Class A 14,410 14,410 14,410 0.0 % 0.0 % Class B 28,748 28,055 28,968 2.5 (0.8 ) Total 43,158 42,465 43,378 1.6 (0.5 )   Stock price: Class A High $ 9.22 $ 26.45 $ 29.40 (65.1 ) % (68.6 ) % Low 5.31 6.93 23.96 (23.4 ) (77.8 ) Closing 5.98 7.30 26.72 (18.1 ) (77.6 ) Class B High $ 10.52 $ 29.95 $ 31.72 (64.9 ) % (66.8 ) % Low 6.10 7.84 26.31 (22.2 ) (76.8 ) Closing 7.03 8.07 29.23 (12.9 ) (75.9 )   Cash dividends declared: Class A $ 0.1771 $ 0.1771 $ 0.1417 0.0 % 25.0 % Class B 0.2125 0.2125 0.1700 0.0 25.0   Book value per common share $ 14.66 $ 14.40 $ 14.11 1.8 % 3.9 % All share and per share amounts have been adjusted to reflect the three-for-two stock split effective June 15, 2007. (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 ADVANTA BUSINESS CARDS STATISTICS ($ in thousands)           Three Months Ended Percent Change From Mar. 31, Dec. 31, Mar. 31, Prior Prior     2008   2007   2007   Quarter   Year New account originations 67,094 61,234 96,781 9.6 % (30.7 ) % Average number of active accounts (A) 956,100 952,557 848,375 0.4 12.7 Ending number of accounts 1,331,496 1,316,523 1,191,820 1.1 11.7 Customer transaction volume $ 3,438,113 $ 3,755,320 $ 3,389,065 (8.4 ) 1.4 Securitization volume increase (decrease) excluding replenishment sales $ (13,787 ) $ 330,000 $ 368,453 N/M N/M Average receivables: Owned $ 999,130 $ 1,164,704 $ 1,284,900 (14.2 ) (22.2 ) Securitized 5,350,034   5,148,195 4,152,857 3.9 28.8 Managed (B) 6,349,164 6,312,899 5,437,757 0.6 16.8 Ending receivables: Owned $ 966,145 $ 1,031,607 $ 1,142,006 (6.3 ) (15.4 ) Securitized 5,303,936   5,315,421 4,444,055 (0.2 ) 19.3 Managed (B) 6,270,081 6,347,028 5,586,061 (1.2 ) 12.2 Operating expense ratio (C) 4.72 % 4.63 % 4.90 % 1.9 (3.7 )   CREDIT QUALITY - OWNED Receivables 30 days or more delinquent $ 51,900 $ 42,424 $ 28,544 Receivables 90 days or more delinquent 24,028 19,204 12,878 As a percentage of receivables: Receivables 30 days or more delinquent 5.37 % 4.11 % 2.50 % 30.7 % 114.8 % Receivables 90 days or more delinquent 2.49 1.86 1.13 33.9 120.4 Net principal charge-offs: Amount $ 16,306 $ 11,542 $ 9,783 As a percentage of average receivables (annualized) 6.53 % 3.96 % 3.05 % 64.9 114.1   CREDIT QUALITY - SECURITIZED Receivables 30 days or more delinquent $ 280,208 $ 229,808 $ 122,426 Receivables 90 days or more delinquent 130,436 105,577 54,633 As a percentage of receivables: Receivables 30 days or more delinquent 5.28 % 4.32 % 2.75 % 22.2 % 92.0 % Receivables 90 days or more delinquent 2.46 1.99 1.23 23.6 100.0 Net principal charge-offs: Amount $ 85,753 $ 53,572 $ 35,082 As a percentage of average receivables (annualized) 6.41 % 4.16 % 3.38 % 54.1 89.6   CREDIT QUALITY - MANAGED (B) Receivables 30 days or more delinquent $ 332,108 $ 272,232 $ 150,970 Receivables 90 days or more delinquent 154,464 124,781 67,511 As a percentage of receivables: Receivables 30 days or more delinquent 5.30 % 4.29 % 2.70 % 23.5 % 96.3 % Receivables 90 days or more delinquent 2.46 1.97 1.21 24.9 103.3 Net principal charge-offs: Amount $ 102,059 $ 65,114 $ 44,865 As a percentage of average receivables (annualized) 6.43 % 4.13 % 3.30 % 55.7 94.8 (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. (C) Operating expense ratio is annualized and calculated as a percentage of average owned and securitized receivables. N/M - Not Meaningful