Form 10Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] Quarterly report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934 for the quarterly period ended
June 30, 1995 or
[ ] Transition report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transition period from
______ to _______
Commission File Number 0-14120
Advanta Corp.
(Exact name of registrant as specified in its charter)
Delaware 23-1462070
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Brandywine Corporate Center, 650 Naamans Rd., Claymont, DE 19703
(Address of Principal Executive Offices) (Zip Code)
(302) 791-4400
(Registrant's telephone number, including area code)
____________________________________________________________________
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
Yes X No ____
* Applicable only to issuers involved in bankruptcy proceedings
during the preceding five years:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court.
Yes No ____
* Applicable only to corporate issuers:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class A Outstanding at August 1, 1995
Common Stock, $.01 par value 17,441,114 shares
Class B Outstanding at August 1, 1995
Common Stock, $.01 par value 23,816,584 shares
<PAGE>
Table of Contents
Page
Part I - Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheets 3
Consolidated Condensed Income Statements 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Condensed Financial
Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 13
Part II - Other Information 27
<PAGE>
ADVANTA CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
June 30, December 31,
1995 1994
ASSETS (Unaudited)
Cash $ 43,953 $ 43,706
Federal funds sold and interest-bearing
deposits with banks 366,185 352,902
Investments available for sale 302,977 318,759
Loan and lease receivables, net:
Available for sale 660,974 573,076
Other loan and lease receivables, net 1,229,554 1,406,378
Total loan and lease receivables, net 1,890,528 1,979,454
Premises and equipment, net 34,516 33,219
Amounts due from credit card securitizations 164,947 144,483
Other assets 254,992 240,525
Total assets $3,058,098 $3,113,048
LIABILITIES
Deposits $1,097,581 $1,159,358
Debt and other borrowings 1,335,397 1,403,128
Other liabilities 114,272 108,872
Total liabilities 2,547,250 2,671,358
STOCKHOLDERS' EQUITY
Class A preferred stock, $1,000 par
value: authorized, issued and
outstanding -- 1,010 shares in 1995
and 1994 1,010 1,010
Class B preferred stock, $.01 par
value: authorized -- 1,000,000 shares
in 1995 and 1994; none issued
Class A common stock, $.01 par value:
authorized -- 200,000,000 shares;
issued -- 17,441,924 shares in 1995
and 17,347,468 in 1994 174 173
Class B common stock, $.01 par value:
authorized -- 200,000,000 shares;
issued -- 23,805,822 in 1995 and
23,131,498 in 1994 238 231
Additional paid in capital, net 182,966 176,465
Retained earnings, net 326,712 263,811
Less: Treasury stock at cost, 10,431
Class B common shares in 1995 (252) 0
Total stockholders' equity 510,848 441,690
Total liabilities and stockholders'
equity $3,058,098 $3,113,048
See Notes to Consolidated Condensed Financial Statements
<PAGE>
ADVANTA CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED INCOME STATEMENTS
(In thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
(Unaudited) (Unaudited)
Interest income:
Loans and leases $ 38,044 $ 32,325 $ 86,569 $ 66,979
Investments 10,513 7,020 21,394 13,046
Total interest income 48,557 39,345 107,963 80,025
Interest expense:
Deposits 14,650 11,485 29,306 23,920
Other debt 20,921 10,095 44,375 18,415
Total interest expense 35,571 21,580 73,681 42,335
Net interest income 12,986 17,765 34,282 37,690
Provision for credit losses 8,583 15,434 17,508 22,263
Net interest income after
provision for credit losses 4,403 2,331 16,774 15,427
Noninterest revenues:
Gain on sale of credit cards 0 18,352 0 18,352
Other noninterest revenues 130,849 89,154 245,072 168,934
Total noninterest revenues 130,849 107,506 245,072 187,286
Operating expenses:
Amortization of credit card
deferred origination
costs, net 16,717 9,202 32,118 14,647
Other operating expenses 67,154 60,022 129,894 108,387
Total operating expenses 83,871 69,224 162,012 123,034
Income before income taxes 51,381 40,613 99,834 79,679
Provision for income taxes 17,981 14,856 35,651 28,998
Net income $ 33,400 $ 25,757 $ 64,183 $ 50,681
Earnings per common share $ .80 $ .63 $ 1.54 $ 1.23
Weighted average common
shares outstanding 41,772 41,173 41,594 40,957
See Notes to Consolidated Condensed Financial Statements
<PAGE>
ADVANTA CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Six Months Ended
June 30,
1995 1994
OPERATING ACTIVITIES (Unaudited)
Net income $ 64,183 $ 50,681
Adjustments to reconcile net income to net
cash provided by operating activities:
Proceeds from sales/securitizations of
receivables 1,767,791 865,458
Equity securities gain (3,469) 0
Purchase of mortgage/lease portfolios (149,166) (57,294)
Principal collected on mortgages 12,794 11,206
Mortgages made to customers (203,574) (246,489)
Depreciation and amortization of intangibles 4,955 3,605
Provision for credit losses 17,508 22,263
Change in other assets and amounts due from
credit card securitizations (46,479) 4,772
Change in other liabilities 18,379 27,039
Gain on securitization of mortgages and leases (15,550) (14,046)
Net cash provided by operating activities 1,467,372 667,195
INVESTING ACTIVITIES
Purchase of investments available for sale (257,393) (1,168,013)
Proceeds from sales of investments available for
sale 251,096 503,866
Proceeds from maturing investments available for
sale 36,709 667,516
Change in fed funds sold and interest-bearing
deposits 1,984 13,968
Change in credit card receivables, excluding sales (1,274,811) (597,337)
Change in premises and equipment (6,047) (7,563)
Excess of cash collections over income recognized
on direct financing leases 9,397 9,271
Equipment purchased for direct financing lease
contracts (107,732) (70,606)
Net change in other loans 135 (108)
Net cash used by investing activities (1,346,662) (649,006)
FINANCING ACTIVITIES
Change in demand and savings deposits (9,597) 113,617
Proceeds from deposits sold 30,018 0
Proceeds from sales of time deposits 256,655 139,533
Payments for maturing time deposits (338,853) (467,026)
Change in repurchase agreements/other borrowings (118,374) 140,000
Proceeds from issuance of subordinated debt 23,224 15,919
Payments on redemption of subordinated debt (25,354) (26,565)
Proceeds from issuance of medium-term notes 185,026 75,026
Proceeds from issuance of notes payable 263,022 2,300
Repayment of notes payable (383,000) (9,787)
Proceeds from issuance of stock 3,023 3,051
Cash dividends paid (6,253) (4,616)
Net cash used by financing activities (120,463) (18,548)
Net increase/(decrease) in cash 247 (359)
Cash at beginning of period 43,706 31,162
Cash at end of period $ 43,953 $ 30,803
See Notes to Consolidated Condensed Financial Statements
<PAGE>
ADVANTA CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands)
June 30, 1995
1) In the opinion of management, the accompanying audited and
unaudited consolidated condensed financial statements contain all
adjustments necessary to present fairly the financial position of
Advanta Corp. and Subsidiaries as of June 30, 1995 and December
31, 1994, the results of their operations for the three and six
month periods ended June 30, 1995 and 1994, and their cash flows
for the three and six month periods ended June 30, 1995 and 1994.
The results of operations for the three and six month periods
ended June 30, 1995 are not necessarily indicative of the results
to be expected for the full year. Certain prior period amounts
have been reclassified to conform with current year
classifications. With respect to operating expenses, the Company
is including the amortization of credit card deferred origination
costs, net of deferred fees, in operating expenses rather than as
a component of interest income as these net costs are linked to
the privilege period of the cards and not to the credit card
receivables.
2) Investments available for sale include securities that the Company
sells from time to time to provide liquidity and in response to
changes in the market. Debt and equity securities classified as
available for sale are reported at market value. Unrealized gains
and losses on these securities (except those held by the Company's
venture capital unit, Advanta Partners LP) are reported as a
separate component of stockholders' equity and included in
retained earnings. Changes in the fair value of Advanta Partners
LP investments are reported in noninterest revenues as equity
securities gains under fair value accounting.
3) Loan and lease receivables available for sale represent
receivables currently on the balance sheet that the Company
generally intends to sell or securitize within the next six
months. These receivables are reported at the lower of book or
fair market value.
4) Loan and lease receivables on the balance sheet, including those
available for sale, consisted of the following:
June 30, December 31,
1995 1994
Gross loan and lease receivables $1,867,799 $1,964,444
Add: Deferred origination costs,
net of deferred fees 62,504 56,627
Less: Reserve for credit losses (39,775) (41,617)
Loan and lease receivables, net $1,890,528 $1,979,454
Number of Accounts:
Credit cards 549,980 337,662
Other loans and leases 9,763 14,034
Total 559,743 351,696
<PAGE>
Receivables and accounts serviced for others consisted of the
following:
June 30, December 31,
1995 1994
Receivables:
Credit cards $5,915,084 $4,808,257
Mortgage loans 1,348,134 1,203,226
Leases 239,608 179,310
Total $7,502,826 $6,190,793
Number of Accounts:
Credit cards 3,657,952 3,490,354
Mortgage loans 26,311 24,668
Leases 49,745 35,537
Total 3,734,008 3,550,559
5) The Company accounts for credit card origination costs under
Statement of Financial Accounting Standards No. 91, "Accounting
for Nonrefundable Fees and Costs Associated with Originating or
Acquiring Loans and Initial Direct Costs of Leases" ("SFAS 91").
This accounting standard requires certain loan and lease
origination fees and costs to be deferred and amortized over the
life of a loan or lease as an adjustment to interest income.
Origination costs are defined under this standard to include costs
of loan origination associated with transactions with independent
third parties and certain costs relating to underwriting
activities and preparing and processing loan documents. The
Company engages third parties to solicit and originate credit card
account relationships. Amounts deferred under these arrangements
were $36.3 million and $25.4 million in the first six months of
1995 and 1994, respectively.
The Company amortizes deferred credit card origination costs under
Issue 93-1 of the Emerging Issues Task Force ("EITF Issue 93-1")
of the Financial Accounting Standards Board regarding the
acquisition of individual credit card accounts from independent
third parties. EITF Issue 93-1 stated that credit card accounts
acquired individually should be accounted for as originations
under SFAS 91 and EITF Issue 92-5. Amounts paid to a third party
to acquire individual credit card accounts should be deferred and
netted against the related credit card fee, if any, and the net
amount should be amortized on a straight line basis over the
privilege period. If a significant fee is charged, the privilege
period is the period that the fee entitles the cardholder to use
the card. If there is no significant fee, the privilege period
should be one year. Direct origination costs incurred related to
credit card account originations initiated after EITF Issue 93-1
are deferred and amortized over 12 months. Costs incurred for
originations which were initiated prior to EITF Issue 93-1 will
continue to be amortized over a 60 month period as was the
practice prior to the EITF 93-1 consensus.
<PAGE>
The Company records excess servicing income on credit card
securitizations representing additional cash flow from the
receivables initially sold based on the repayment term, including
prepayments. Prior to the EITF Issue 93-1 consensus, net gains
were not recorded at the time each transaction was completed as
excess servicing income was offset by the write-off of deferred
origination costs and the establishment of recourse reserves.
Subsequent to the prospective adoption discussed above, excess
servicing income has been recorded at a lower level at the time of
each transaction, and is predominantly offset by the establishment
of recourse reserves. The lower level of excess servicing income
corresponds with the discontinuance of deferred origination cost
write-offs upon securitization of receivables as discussed above.
During the "revolving period" of each securitization, income is
recorded based on additional cash flows from the new receivables
which are sold to the securitization trust on a continual basis to
replenish the investors' interest in trust receivables which have
been repaid by the credit cardholders.
6) The following table shows the changes in the reserve for credit
losses for the periods presented:
Six Months Ended Year Ended
June 30, December 31,
1995 1994
Balance, beginning of period $ 41,617 $ 31,227
Current provision 17,508 34,198
Transfer of recourse
reserves to on-balance
sheet reserves 0 11,485
Net charge-offs (19,350) (35,293)
Balance, end of period $ 39,775 $ 41,617
7) At June 30, 1995 and December 31, 1994, the Company had $164.9
million and $144.5 million, respectively, of amounts due from
credit card securitizations. These amounts include excess
servicing, accrued interest receivable and other amounts related
to these securitizations and are net of recourse reserves
established. A portion of these amounts is subject to liens held
by the providers of credit enhancement facilities for the
respective securitizations.
<PAGE>
8) Selected Balance Sheet Information
Other Assets
June 30, December 31,
1995 1994
Excess mortgage servicing rights $ 82,745 $ 73,223
Accrued interest receivable 42,848 39,353
Prepaid assets 34,228 28,516
Investments in operating leases 11,791 13,123
Deferred costs 9,962 9,500
Excess servicing - leasing 8,373 5,949
Due from trustees - mortgage 7,812 6,295
Current and deferred federal
income taxes 9,102 18,658
Goodwill 5,140 5,318
Other real estate owned 3,982 4,564
Due from trustees - leasing 2,490 2,010
Other 36,519 34,016
Total other assets $254,992 $240,525
Other Liabilities
June 30, December 31,
1995 1994
Deferred fees and other reserves $ 36,033 $ 42,855
Accounts payable and accrued
expenses 27,540 31,380
Accrued interest payable 23,855 10,640
Current and deferred state income
taxes 9,306 6,813
Other 17,538 17,184
Total other liabilities $114,272 $108,872
9) Income tax expense reflects an effective tax rate of approximately
35.0% and 35.7%, for the three and six month periods ended June
30, 1995, compared to 36.6% and 36.4% for the comparable 1994
periods. The Company accounts for income taxes under the
Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" ("SFAS 109").
Income tax expense consisted of the following components:
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Current:
Federal $17,518 $18,212 $32,087 $30,476
State 392 2,224 3,518 4,496
Total current 17,910 20,436 35,605 34,972
Deferred:
Federal (623) (5,205) (529) (6,224)
State 694 (375) 575 250
Total deferred 71 (5,580) 46 (5,974)
Total tax expense $17,981 $14,856 $35,651 $28,998
<PAGE>
The reconciliation of the statutory federal income tax to the
consolidated tax expense is as follows:
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Statutory federal
income tax $17,983 $14,228 $34,942 $27,901
State income taxes 706 1,202 2,660 3,085
Tax-free income (315) (241) (594) (569)
Other (393) (333) (1,357) (1,419)
Consolidated tax
expense $17,981 $14,856 $35,651 $28,998
The net deferred tax asset is comprised of the following:
June 30, December 31,
1995 1994
Deferred taxes:
Gross assets $ 73,641 $ 78,602
Gross liabilities (56,315) (52,344)
Total deferred taxes $ 17,326 $ 26,258
The Company did not record any valuation allowances against
deferred tax assets at June 30, 1995 and December 31, 1994.
The tax effect of significant temporary differences representing
deferred tax assets and liabilities is as follows:
June 30, December 31,
1995 1994
SFAS 91 $(22,204) $(20,034)
Loan losses 17,540 14,965
Mortgage banking income 10,702 10,174
Securitization income (30,977) (28,949)
Leasing income 33,933 42,473
Insurance underwriting (3,134) (3,361)
Deferred compensation 1,902 1,388
Mark to market adjustment 1,556 3,021
Change in accounting method 1,109 1,008
Other 6,899 5,573
Net deferred tax asset $ 17,326 $ 26,258
<PAGE>
10) The Company has adopted several management incentive plans
designed to provide incentives to participating employees to
remain in the employ of the Company and devote themselves to its
success. Under these plans, certain eligible employees were
required and others were given the opportunity to elect to take
portions of their anticipated or "target" bonus payments for
future years in the form of restricted shares of common stock.
The restricted shares are subject to forfeiture should the
employee terminate employment with the Company prior to vesting.
The shares become unrestricted over time if certain performance
criteria are met. At June 30, 1995, a total of 1,314,059 shares
issued under these plans were subject to restrictions and were
included in the number of shares outstanding. These shares are
considered common stock equivalents in the calculation of earnings
per common share.
Deferred compensation of $22.8 million and $14.2 million related
to these shares of restricted stock is reflected as a reduction of
equity at June 30, 1995 and December 31, 1994, respectively.
11) In April 1994, the Company, through its subsidiary, Colonial
National Bank USA ("Colonial National" or the "Bank"), reached an
agreement with NationsBank of Delaware, N.A., to sell certain
credit card customer relationships which at that time represented
approximately $150 million of securitized credit card receivables
(less than 4% of the Company's managed credit card receivables as
of June 30, 1994). In the second quarter of 1994, the Company
recorded an $18.4 million pretax gain on the sale related to the
value associated with the customer relationships. In addition,
the Company deferred a portion of the proceeds related to the
excess spread of the receivables over the remaining life of the
securitization trust, which terminated in the second quarter of
1995. These proceeds were recognized as securitization income
over the related period. While the accounts related to these
customer relationships were transferred to NationsBank upon
termination of the securitization trust, these accounts were
serviced by Colonial National at market rates until the systems
conversion to NationsBank was completed, which occurred in July
1995.
<PAGE>
12) The following table shows the calculation of earnings per common
share:
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Net income $33,400 $25,757 $64,183 $50,681
less: preferred dividends 0 0 (141) (141)
Net income available
to common shares $33,400 $25,757 $64,042 $50,540
Average common
stock outstanding 39,676 38,863 39,585 38,759
Common stock equivalents 2,096 2,310 2,009 2,198
Weighted average
common shares
outstanding
(in thousands) 41,772 41,173 41,594 40,957
Earnings per common
share $ .80 $ .63 $ 1.54 $ 1.23
<PAGE>
ADVANTA CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Net income for the three months ended June 30, 1995 was $33.4 million,
a $7.6 million or 30% increase from the $25.8 million reported for the
second quarter of 1994. Earnings per share for the second quarter of
1995 were $.80, a 27% increase from $.63 per share for the same period
last year.
Earnings increased in the second quarter of 1995 primarily as a result
of a 57% increase in average managed receivables, partially offset by
an approximate 14% contraction in the managed net interest margin,
reflecting the Company's growth strategy of utilizing low introductory
rate pricing on credit cards. Earnings also reflected continuing
strong credit quality with the total managed charge-off rate
decreasing to 2.1% for the second quarter of 1995 from 2.5% for the
second quarter of 1994. The Company continues to securitize a majority
of its receivables and report the performance of the securitized
receivables as noninterest revenues. Noninterest revenues increased
$23.3 million, or 22%, to $130.8 million in the second quarter of 1995
from $107.5 million in the comparable 1994 period. This increase was
due to the 68% increase in average securitized receivables, which
outweighed the $18.4 million gain on the sale of credit card customer
relationships recorded in the second quarter of 1994. The operating
expense ratio decreased to 3.0% of average managed receivables in the
second quarter of 1995, compared to 4.3% in the second quarter of
1994. The Company made additional investments in marketing and
developmental initiatives during last year's second quarter.
For the six months ended June 30, 1995, net income was $64.2 million,
a 27% increase over the $50.7 million for the comparable year earlier
period. Earnings per share for the six months ended June 30, 1995
increased 25% to $1.54 from $1.23 for the comparable 1994 period.
NET INTEREST INCOME
Net interest income for the second quarter of 1995 decreased $4.8
million, or 27%, to $13.0 million from $17.8 million for the same
period of 1994. This resulted from a decline in the owned net
interest margin to 2.38% for the second quarter of 1995 from 3.85% for
the second quarter of 1994, partially offset by a $392 million
increase in average interest earning assets. The lower owned net
interest margin resulted from a significant increase in the proportion
of credit card receivables earning low introductory rates, reflecting
the success of the Company's marketing campaigns. The credit cards
earning introductory rates reprice upwards after an introductory
period of up to one year. However, due to the substantial volume of
new credit cards being originated in 1995, it is not anticipated that
the net interest margin will widen in the last half of 1995.
Furthermore, while a large number of credit cards will reprice upwards
in the first quarter of 1996, most of the receivables on those credit
cards will have been securitized. Consequently, the enhanced revenues
<PAGE>
on those receivables will be recorded primarily as increased
noninterest revenues (securitization income) and will not affect the
owned net interest margin, although it is expected that they will
positively impact the managed net interest margin.
The following table provides an analysis of both owned and managed
interest income and expense data, average balance sheet data, net
interest spread (the difference between the yield on interest earning
assets and the average rate paid on interest-bearing liabilities), and
net interest margin (the difference between the yield on interest
earning assets and the average rate paid to fund interest earning
assets) for the three and six month periods ended June 30, 1995 and
1994. Average owned loan and lease receivables and the related
interest revenues include certain loan fees.
<PAGE>
<TABLE>
INTEREST RATE ANALYSIS
<CAPTION>
Three Months Ended June 30,
1995 1994
Average Yield/ Average Yield/
Balance (1) Interest Rate Balance (1) Interest Rate
<S> <C> <C> <C> <C> <C> <C>
On-balance sheet
Credit cards $1,280,210 $ 31,246 9.76% $1,099,843 $ 28,006 10.19%
Mortgage loans 188,465 4,319 9.19 135,025 2,550 7.57
Leases 89,538 2,785 12.44 52,894 1,909 14.43
Other loans 5,096 92 7.24 3,772 68 7.23
Gross receivables 1,563,309 38,442 9.84 1,291,534 32,533 10.08
Investments (2) 741,625 10,917 5.89 621,424 7,463 4.80
Total interest earning
assets $2,304,934 $ 49,359 8.57% $1,912,958 $ 39,996 8.37%
Interest-bearing
liabilities $2,182,913 $ 35,571 6.47% $1,747,315 $ 21,580 4.87%
Net interest spread 2.10% 3.50%
Net interest margin 2.38% 3.85%
Off-balance sheet
Credit cards $5,752,617 $3,118,461
Mortgage loans 1,300,537 1,073,957
Leases 213,475 135,160
Total average
securitized receivables $7,266,629 $4,327,578
Total average managed
receivables $8,829,938 $5,619,112
Managed Net Interest
Analysis (3):
Interest earning assets $8,057,551 $251,006 12.46% $5,031,419 $151,233 12.03%
Interest-bearing
liabilities $7,935,530 $130,723 6.58% $4,865,776 $ 63,898 5.23%
Net interest spread 5.88% 6.80%
Net interest margin 5.96% 6.95%
<FN>
(1) Includes assets held and available for sale and nonaccrual loans and
leases.
(2) Interest and average rate for tax-free securities computed on a tax
equivalent basis using a statutory rate of 35%.
(3) Combination of owned interest earning assets/owned interest-bearing
liabilities and securitized credit card assets/liabilities.
</TABLE>
<PAGE>
<TABLE>
INTEREST RATE ANALYSIS
<CAPTION>
Six Months Ended June 30,
1995 1994
Average Yield/ Average Yield/
Balance (1) Interest Rate Balance (1) Interest Rate
<S> <C> <C> <C> <C> <C> <C>
On-balance sheet
Credit cards $1,399,131 $ 74,135 10.60% $1,115,658 $ 58,210 10.44%
Mortgage loans 162,497 7,240 8.98 127,038 5,361 8.51
Leases 88,203 5,854 13.27 49,453 3,652 14.77
Other loans 5,115 180 7.10 3,707 135 7.34
Gross receivables 1,654,946 87,409 10.57 1,295,856 67,358 10.41
Investments (2) 755,738 22,206 5.90 602,759 13,912 4.63
Total interest earning
assets $2,410,684 $109,615 9.11% $1,898,615 $ 81,270 8.57%
Interest-bearing
liabilities $2,308,170 $ 73,681 6.36% $1,747,496 $ 42,335 4.83%
Net interest spread 2.75% 3.74%
Net interest margin 2.95% 4.07%
Off-balance sheet
Credit cards $5,466,776 $2,954,347
Mortgage loans 1,260,784 1,057,728
Leases 201,523 129,219
Total average
securitized receivables $6,929,083 $4,141,294
Total average managed
receivables $8,584,029 $5,437,150
Managed Net Interest
Analysis (3):
Interest earning assets $7,877,460 $489,559 12.43% $4,852,962 $292,669 12.06%
Interest-bearing
liabilities $7,774,946 $254,679 6.54% $4,701,843 $118,883 5.05%
Net interest spread 5.89% 7.01%
Net interest margin 5.95% 7.15%
<FN>
(1) Includes assets held and available for sale and nonaccrual loans and
leases.
(2) Interest and average rate for tax-free securities computed on a tax
equivalent basis using a statutory rate of 35%.
(3) Combination of owned interest earning assets/owned interest-bearing
liabilities and securitized credit card assets/liabilities.
</TABLE>
<PAGE>
MANAGED PORTFOLIO DATA
The following table provides selected information on a managed basis, as
well as a summary of the effects of credit card securitizations on selected
line items of the Company's consolidated income statements as of and for
the six months ended June 30, 1995 and 1994.
Six Months Ended
June 30,
1995 1994
Balance sheet data:
Average managed receivables $ 8,584,029 $ 5,437,150
Managed receivables 9,370,626 5,933,121
Total managed assets 10,560,924 6,795,223
Managed net interest margin
(on a fully tax equivalent basis) 5.95% 7.15%
As a percentage of gross managed
receivables:
Total loans 30 days or more
delinquent 2.7% 2.9%
Net charge-offs 2.1% 2.5%
Effects of credit card
securitizations on:
Net interest income $ (198,947) $ (134,851)
Provision for credit losses 65,632 44,788
With respect to the above information on the effects of credit card
securitizations, net interest income represents the amount by which net
interest income would have been higher had the securitized receivables
remained on the balance sheet. In addition, provision for credit losses
represents 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 charge-offs. Both effects on net
interest income and the provision for credit losses described above are
netted and included in other noninterest revenues in the Consolidated
Condensed Income Statements.
PROVISION FOR CREDIT LOSSES
The provision for credit losses for the second quarter of 1995 totalled
$8.6 million compared to $15.4 million for the comparable period of 1994.
The Company provided approximately $10 million of additional general
reserves during the second quarter of 1994. Excluding this addition to
general reserves, the provision increased $3.2 million primarily due to
the Company's desire to maintain a targeted level of reserve coverage of
impaired assets on credit cards. For the six month period ended June 30,
1995, the provision for credit losses was $17.5 million compared to $22.3
million for the six months of 1994. The owned impaired asset level was
$36.1 million or 1.9% of receivables at June 30, 1995 compared to $48.7
million or 3.7% of receivables a year ago. The higher 1994 level was due
to the repurchase of approximately $45 million of nonperforming mortgage
loans from the securitization trusts during the first half of 1994. In
connection with these repurchases, the Company also transferred $11
million of off-balance sheet recourse reserves to on-balance sheet
<PAGE>
reserves. These repurchases increased the owned impaired asset level
while having no impact on either the level of managed impaired assets or
the provision for credit losses (see also Asset Quality below). At June
30, 1995, approximately $16 million of the loans that had been
repurchased during 1994 remained on the balance sheet as either
nonperforming loans or other real estate owned.
ASSET QUALITY
The reserve for credit losses is maintained for on-balance sheet
receivables. The reserve is intended to cover credit losses inherent in
the owned loan portfolio. With regard to securitized assets, anticipated
losses and related recourse reserves are reflected in the calculations of
securitization income, amounts due from credit card securitizations and
other assets. Recourse reserves are intended to cover all probable
credit losses over the life of the receivables securitized. The Company
periodically evaluates its on-balance sheet and recourse reserve
requirements and, as appropriate, effects transfers between these
accounts.
The reserve for credit losses on a consolidated owned basis was $39.8
million or 2.1% of receivables at June 30, 1995 compared to $41.6 million
or 2.1% of receivables at December 31, 1994 and $50.2 million or 3.8% of
receivables at June 30, 1994. The consolidated reserve coverage of
impaired assets was 110.2% at June 30, 1995 compared to 96.1% at year end
1994 and 103.1% at June 30, 1994.
On the total managed portfolio, impaired assets were $113.9 million or 1.2%
of receivables at June 30, 1995, compared to $102.4 million or 1.3% of
receivables at December 31, 1994 and $90.9 million or 1.5% of receivables
at June 30, 1994. A key credit quality statistic, the 30 day and over
delinquency rate on managed credit cards, was 2.0% at
June 30, 1995, flat with the rate of a year ago.
On the total owned portfolio, impaired assets were $36.1 million or 1.9%
of receivables at June 30, 1995, compared to $43.3 million or 2.2% of
receivables and $48.7 million or 3.7% of receivables at December 31, 1994
and June 30, 1994, respectively.
The total managed charge-off rate for the six months of 1995 was 2.1%, down
from 2.3% for the full year of 1994 and 2.5% for the six months of 1994.
The charge-off rate on managed credit cards was 2.4% for the six months of
1995, down from 2.5% for the full year of 1994 and 2.7% for the comparable
1994 period. The charge-off rate on managed mortgage loans was 1.0% for
the six months of 1995, down from 1.7% for the comparable 1994 period.
The charge-off rate on consolidated owned receivables was 2.3% of average
receivables for the six months of 1995, compared to 2.6% for the full year
of 1994 and 2.3% for the year ago period. The charge-off rate on owned
credit cards was 2.2% for the six months of 1995, up from 1.9% for the full
year of 1994 and 2.0% for the comparable 1994 period.
<PAGE>
The following tables provide a summary of impaired assets, delinquencies
and charge-offs, as of and for the year-to-date periods indicated.
June December June
30, 31, 30,
CONSOLIDATED - MANAGED 1995 1994 1994
Nonperforming assets $ 66,489 $ 61,587 $ 63,062
Accruing loans past due 90 days or more 47,365 40,837 27,831
Impaired assets 113,854 102,424 90,893
Total loans 30 days or more delinquent 248,358 220,390 173,725
As a percentage of gross receivables:
Nonperforming assets .7% .8% 1.1%
Accruing loans past due 90 days or more .5 .5 .5
Impaired assets 1.2 1.3 1.5
Total loans 30 days or more delinquent 2.7 2.7 2.9
Net charge-offs:
Amount $ 90,496 $139,676 $ 67,836
As a percentage of average gross
receivables (annualized) 2.1% 2.3% 2.5%
CREDIT CARDS - MANAGED
Nonperforming assets $ 18,052 $ 14,227 $ 13,885
Accruing loans past due 90 days or
more 47,206 40,721 27,793
Impaired assets 65,258 54,948 41,678
Total loans 30 days or more 152,441 133,121 89,306
delinquent
As a percentage of gross receivables:
Nonperforming assets .2% .2% .3%
Accruing loans past due 90 days or .6 .6 .6
more
Impaired assets .9 .8 .9
Total loans 30 days or more 2.0 2.0 2.0
delinquent
Net charge-offs:
Amount $ 80,959 $115,218 $ 55,862
As a percentage of average gross
receivables (annualized) 2.4% 2.5% 2.7%
MORTGAGE LOANS - MANAGED
Nonperforming assets $ 45,881 $ 44,678 $ 47,396
Total loans 30 days or more delinquent 73,945 65,966 69,086
As a percentage of gross receivables:
Nonperforming assets 3.0% 3.3% 3.9%
Total loans 30 days or more 4.8 4.9 5.6
delinquent
Net charge-offs:
Amount $ 6,895 $ 20,709 $ 10,366
As a percentage of average gross
receivables(annualized) 1.0% 1.7% 1.7%
LEASES - MANAGED
Nonperforming assets $ 2,556 $ 2,682 $ 1,771
Total loans 30 days or more 21,538 20,972 15,239
delinquent
As a percentage of receivables:
Nonperforming assets .8% 1.0% .9%
Total loans 30 days or more delinquent 6.8 7.9 7.6
Net charge-offs:
Amount $ 2,651 $ 3,747 $ 1,625
As a percentage of average
receivables (annualized) 1.8% 2.0% 1.8%
<PAGE>
June December June
30, 31, 30,
CONSOLIDATED - OWNED 1995 1994 1994
Reserve for credit losses $39,775 $41,617 $50,222
Nonperforming assets 26,312 31,949 41,783
Accruing loans past due 90 days or more 9,767 11,354 6,907
Impaired assets 36,079 43,303 48,690
Reserve as a percentage of impaired
assets 110.2% 96.1% 103.1%
As a percentage of gross receivables:
Reserve 2.1% 2.1% 3.8%
Nonperforming assets 1.4 1.6 3.1
Accruing loans past due 90 days or more .5 .6 .5
Impaired assets 1.9 2.2 3.7
Net charge-offs:
Amount $19,350 $35,293 $14,603
As a percentage of average gross
receivables (annualized) 2.3% 2.6% 2.3%
CREDIT CARDS - OWNED
Reserve for credit losses $24,906 $27,486 $18,125
Nonperforming assets 3,684 3,502 2,875
Accruing loans past due 90 days or more 9,608 11,238 6,869
Impaired assets 13,292 14,740 9,744
Reserve as a percentage of impaired 187.4% 186.5% 186.0%
assets
As a percentage of gross receivables:
Reserve 1.6% 1.6% 1.6%
Nonperforming assets .2 .2 .2
Accruing loans past due 90 days or more .6 .6 .6
Impaired assets .8 .9 .8
Net charge-offs:
Amount $15,327 $22,688 $11,074
As a percentage of average gross
receivables (annualized) 2.2% 1.9% 2.0%
MORTGAGE LOANS - OWNED (1)
Reserve for credit losses $ 2,275 $ 5,164 $11,953
Nonperforming assets 21,825 27,379 38,453
Reserve as a percentage of impaired 10.4% 18.9% 31.1%
assets
As a percentage of gross receivables:
Reserve 1.1% 3.6% 10.6%
Nonperforming assets 11.0 19.2 34.1
Net charge-offs:
Amount $ 3,363 $11,689 $ 3,145
As a percentage of average gross
receivables(annualized) 4.1% 9.7% 5.0%
LEASES - OWNED
Reserve for credit losses $ 995 $ 1,076 $ 1,385
Nonperforming assets 803 1,068 445
Reserve as a percentage of impaired 123.9% 100.7% 311.2%
assets
As a percentage of receivables:
Reserve 1.3% 1.2% 2.4%
Nonperforming assets 1.0 1.2 .8
Net charge-offs:
Amount $ 669 $ 914 $ 401
As a percentage of average receivables
(annualized) 1.5% 1.5% 1.6%
(1) Beginning March 1994, the Company initiated a program for repurchasing
nonperforming assets from the securitized portfolios (see "Provision for
Credit Losses").
<PAGE>
NONINTEREST REVENUES
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Gain on sale of credit
cards $ 0 $ 18,352 $ 0 $ 18,352
Other noninterest revenues:
Credit card securitization
income 45,666 36,247 86,735 68,921
Credit card servicing
income 27,927 15,336 52,799 29,136
Credit card interchange
income 22,052 16,569 41,550 30,575
Income from mortgage
banking activities 11,929 8,587 22,147 16,792
Leasing revenues, net 8,301 5,787 17,895 10,380
Insurance revenues, net 6,117 3,056 12,275 5,966
Equity securities gain 3,803 0 3,803 0
Other 5,054 3,572 7,868 7,164
Total other noninterest
revenues $130,849 $89,154 $245,072 $168,934
Total noninterest revenues $130,849 $107,506 $245,072 $187,286
For the second quarter of 1995, noninterest revenues increased 22% to
$130.8 million from $107.5 million for the same period of 1994. Included
in the second quarter of 1994 was an $18.4 million gain on the sale of $150
million of credit card customer relationships (See Note 11). Total other
noninterest revenues rose $41.7 million or 47% from $89.2 million in the
second quarter of 1994. Credit card securitization income increased $9.4
million or 26% to $45.7 million as a result of an 84% increase in average
securitized credit card receivables partially offset by contraction in the
net interest margin. For the 1994 periods, securitized interchange income
has been reclassified from credit card securitization income to credit card
interchange income. Credit card interchange income, which represents
approximately 1.4% of credit card purchases, increased $5.5 million to
$22.1 million. Credit card servicing income increased $12.6 million due to
higher securitized balances. Leasing revenues, net, increased $2.5 million
to $8.3 million primarily due to a 58% growth in average securitized lease
receivables from the comparable quarter of 1994. Insurance revenues, net,
were $6.1 million for the second quarter of 1995, up from $3.1 million for
last year's second quarter. This growth is attributed to the successful
marketing of insurance products in the credit card, mortgage and leasing
businesses. The $3.8 million equity securities gain in 1995 related to an
equity investment, held by the Company's venture capital unit, Advanta
Partners LP, in a corporation whose initial public offering occurred during
the second quarter of 1995.
For the six month period ended June 30, 1995 noninterest revenues rose to
$245.1 million from $187.3 million for the comparable 1994 period, a 31%
increase. This improvement resulted primarily from an 85% growth in
average securitized credit card receivables and a 56% growth in average
securitized lease receivables partially offset by 1994's gain on sale of
the credit card customer relationships.
<PAGE>
OPERATING EXPENSES
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Amortization of credit card
deferred origination costs,
net $16,717 $ 9,202 $ 32,118 $ 14,647
Other operating expenses:
Salaries and employee
benefits 27,074 21,460 51,062 42,023
Marketing 6,665 11,976 14,283 18,360
External processing 6,552 5,349 12,279 10,006
Credit card fraud losses 4,464 4,737 8,526 8,244
Postage 4,339 3,052 8,730 5,753
Professional fees 3,293 1,824 5,565 3,576
Equipment expense 2,953 2,291 5,707 4,346
Telephone expense 2,499 1,804 5,354 3,597
Credit and collection
expense 2,332 1,769 4,476 3,435
Occupancy expense 2,249 2,076 4,265 3,863
Other 4,734 3,684 9,647 5,184
Total other operating
expenses $67,154 $60,022 $129,894 $108,387
Total operating expenses $83,871 $69,224 $162,012 $123,034
The amortization of credit card deferred origination costs, net, increased
from $9.2 million for the second quarter of 1994 to $16.7 million for the
second quarter of 1995. This increase resulted primarily from amortization
related to the $66 million of credit card origination costs that have been
deferred since the second quarter of 1994. Costs incurred for credit card
originations initiated after May 1993 are being amortized over 12 months,
rather than pursuant to the previous policy of 60 months. Total other
operating expenses of $67.2 million for the three months ended June 30,
1995 increased 12% from $60.0 million for the same period of 1994. Other
operating expenses as a percentage of average managed receivables were 3.0%
for the second quarter of 1995, down from 4.3% in the comparable 1994
period. The increase in total other operating expenses is attributable, in
part, to a 24% increase in the number of employees from 1,693 at June 30,
1994 to 2,094 at June 30, 1995 to effectively service the current and
anticipated account growth. Other expenses, including external processing,
postage and telephone expense showed increases consistent with the increase
in the number of credit card accounts managed. Marketing expenses,
however, were lower in 1995 due to additional investments in marketing and
developmental initiatives the Company made in the second quarter of 1994.
For the first six months of 1995, total operating expenses increased 32% to
$162.0 million from $123.0 million for the same 1994 period. Average
managed receivables grew 58% over the same period of time. Other operating
expenses as a percentage of average managed receivables were 3.0% for the
six months ended June 30, 1995, down from 4.0% for the six months ended
June 30, 1994.
<PAGE>
As a result of continued investments in developmental initiatives, the
Company entered into a joint venture agreement with The Royal Bank of
Scotland ("RBS"), for the purpose of issuing credit cards in the United
Kingdom. This new company, RBS Advanta, anticipates the issuance of
bankcards to commence by the end of 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company's goal is to maintain an adequate level of liquidity, both
long- and short-term, through active management of both assets and
liabilities. During the first six months of 1995, the Company, through its
subsidiaries, securitized $1.3 billion of credit card receivables, $250
million of mortgage loans and $88 million of equipment lease receivables.
Cash generated from these transactions was temporarily invested in
short-term, high quality investments at money market rates awaiting
redeployment to pay down borrowings and to fund future credit card,
mortgage and lease receivable growth. At June 30, 1995, the Company had
approximately $661 million of loan and lease receivables and $303 million
of investments available for sale which could be sold to generate
additional liquidity.
The debt securities of Advanta Corp. achieved investment-grade ratings from
the nationally recognized rating agencies in 1993. These ratings have
allowed the Company to further diversify its funding sources. As a result,
in 1994 the Company obtained revolving credit facilities totaling $255
million from a consortium of banks and $200 million in money market bid
lines. In the second quarter of 1995, the Company's revolving credit
facilities were consolidated into one facility and doubled in size to $510
million. The Company may also sell up to $325 million of medium-term notes
as needed.
In April 1994, the Company, through its subsidiary, Colonial National Bank
USA, reached an agreement with NationsBank of Delaware, N.A., to sell
certain credit card customer relationships which at that time represented
approximately $150 million of securitized credit card receivables (less
than 4% of the Company's managed credit card receivables as of June 30,
1994). While the accounts related to these customer relationships were
transferred to NationsBank upon termination of the securitization trust in
the second quarter of 1995, these accounts were serviced by Colonial
National at market rates until the systems conversion to NationsBank was
completed, which occurred in July 1995.
Subsequent to quarter end, the Company securitized $600 million of credit
card receivables, generating additional funding for future asset growth,
and a $500 million universal shelf registration statement filed by the
Company with the Securities and Exchange Commission became
effective. On August 1, 1995, the Company announced a planned offering,
under the universal shelf, of depositary shares representing interests in a
new series of convertible Class B preferred stock, which preferred stock
will be mandatorily convertible into shares of the Company's Class B common
stock.
<PAGE>
INTEREST RATE SENSITIVITY
Interest rate sensitivity refers to net interest income variability
resulting from mismatches between asset and liability indices (basis risk)
and the effects which these changes in market interest rates have on asset
and liability maturity mismatches (gap risk).
The Company attempts to minimize the impact of market interest rate
fluctuations on net interest income and net income by regularly evaluating
the risk inherent in its asset and liability structure, including
securitized assets. This risk arises from continuous changes in the
Company's asset/liability mix, market interest rates, the yield curve,
prepayment trends and the timing of cash flows. Computer simulations are
used to evaluate net interest income volatility under varying rate, spread
and volume projections over monthly time periods of up to two years.
Beginning in the first quarter of 1995, the Company's credit card marketing
efforts were weighted heavily towards variable rate cards priced at a
spread over LIBOR rather than a spread over the prime rate. The Company
believes that this shift will prospectively reduce the basis risk to which
the Company has been subject as the result of maintaining credit card
portfolios indexed to the prime rate while funding certain on-balance sheet
liabilities and securitizing a majority of the credit card receivables at
a spread over LIBOR.
In managing its interest rate sensitivity position, the Company
periodically securitizes, sells and purchases assets, alters the mix and
term structure of its funding base, changes its investment portfolio and
short-term investment position, and uses derivative financial instruments.
Derivative financial instruments are used for the express purpose of
managing exposure to changes in interest rates and, by policy, are not used
for any speculative purposes (see discussion under "Derivatives
Activities"). The Company has primarily utilized variable rate funding in
pricing its credit card securitization transactions in an attempt to match
the variable rate pricing dynamics of the underlying receivables sold to
the trusts. Variable rate funding is also used on the balance sheet as
well, in support of unsecuritized receivables which carry variable rates.
Although credit card receivable rates are generally set at a spread over
the prime rate, they often contain interest rate floors. These floors have
the impact of converting the credit card receivables to fixed rate
receivables in a low interest rate environment. In addition, the Company
at times offers fixed rate pricing to consumers for the introductory rate
period of its credit cards. In instances when a significant portion of
credit card receivables are at fixed rates or their contractual floors, the
Company may convert part of the underlying funding to a fixed rate by using
interest rate hedges, swaps and fixed rate securitizations. In pricing
mortgage and lease securitizations, both fixed rate and variable rate
funding are used depending upon the characteristics of the underlying
receivables.
<PAGE>
Additionally, basis risk exists in on-balance sheet funding as well as
securitizing credit card receivables at a spread over LIBOR when the rate
on the underlying assets is indexed to the prime rate. The underlying
liability or coupon on a securitization is often indexed to LIBOR, and
LIBOR does not perfectly correlate to movements in the prime rate. The
Company measures the basis risk resulting from potential variability in the
spread between prime and LIBOR and incorporates such risk into the asset
and liability management process. During 1994, $425 million in prime-LIBOR
corridors were executed in order to provide protection against narrowing of
these spreads. During the first six months of 1995 there were no
additional prime-LIBOR corridors executed.
Interest rate fluctuations affect net interest income at virtually all
financial institutions. While interest rate volatility does have an effect
on net interest income, other factors also contribute significantly to
changes in net interest income. Specifically, within the credit card
portfolio, pricing decisions and customer behavior regarding convenience
usage affect the yield on the portfolio. These factors may counteract or
exacerbate income changes due to fluctuating interest rates. The Company
closely monitors interest rate movements, competitor pricing and consumer
behavioral changes in its ongoing analysis of net interest income
sensitivity.
DERIVATIVES ACTIVITIES
The Company utilizes derivative financial instruments for the purpose of
managing its interest rate and foreign currency exposure. The Company has a
number of mechanisms in place that enable it to monitor and control both
market and credit risk from these derivatives activities. At the broader
level, all derivatives strategies are managed under the hedging policy
approved by the Board of Directors that details the use of such derivatives
and the individuals authorized to execute derivatives transactions. All
derivatives strategies must be approved by the Company's senior management
(President, Chief Financial Officer and Treasurer).
As part of this approval process, a market risk analysis is completed to
determine the potential impact on the Company from severe negative
(stressed) movements in the market. By policy, derivatives transactions may
only be used to manage the Company's exposure to interest rate and foreign
currency risk and may not be used for speculative purposes. As such, the
impact of any derivatives transaction is calculated using the Company's
asset/liability model to determine its suitability.
Procedures and processes are in place to provide reasonable assurance that
prior to and after the execution of any derivatives strategy, market,
credit and liquidity risks are fully analyzed and incorporated into the
Company's asset/liability and risk measurement models and the proper
accounting treatment for the transaction is identified.
As of June 30, 1995 and December 31, 1994, all of the Company's derivatives
were designated as hedges or synthetic alterations and were accounted for
as such. For the six months ended June 30, 1995 and the year ended December
31, 1994, there were no derivatives contracts terminated prior to scheduled
maturity.
<PAGE>
The following table summarizes by notional amounts the Company's derivative
instruments:
June 30, December 31,
1995 1994
Interest rate swaps $ 782,735 $ 459,735
Interest rate options:
Caps written 1,180,000 1,100,000
Caps purchased 190,000 110,000
Corridors 425,000 425,000
Forward contracts 89,497 39,000
Total notional amount $2,667,232 $2,133,735
The notional amounts of derivatives do not represent amounts exchanged by
the counterparties and, thus, are not a measure of the Company's exposure
through its use of derivatives. The amounts exchanged are determined by
reference to the notional amounts and the other terms of the derivatives
contracts.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a)(1) A report on Form 8-K, dated June 28, 1995, was filed
by the Company describing litigation commenced against the
Company's subsidiary, Colonial National Bank USA, over the
exportation of certain credit card fees from Delaware into
Pennsylvania. The Company does not consider this litigation
to be material. No financial statements were filed with the
report.
(a)(2) A report on Form 8-K, dated July 20, 1995, was filed
by the Company setting forth the financial highlights of
the Company's results of operations for the period ended
June 30, 1995. A Financial Data Schedule was included as an
exhibit in this Form 8-K.
(a)(3) A report on Form 8-K, dated August 3, 1995, was filed
by the Company to report that the Board of Directors had
elected Alex "Pete" Hart as the Company's new Chief Executive
Officer. Dennis Alter, who has served as Chief Executive
Officer since 1972, will remain as Chairman of the Board of
the Company. No financial statements were filed with the
report.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereto duly authorized.
Advanta Corp.
(Registrant)
August 11, 1995 By /s/Gene S. Schneyer
Vice President,
Secretary & General Counsel
August 11, 1995 By /s/John J. Calamari
Vice President, Finance and
Principal Accounting Officer
<PAGE>
EXHIBIT INDEX
Exhibit Description
2 Inapplicable.
4 Inapplicable.
11 Inapplicable.
15 Inapplicable.
18 Inapplicable.
19 Inapplicable
22 Inapplicable.
23 Inapplicable.
24 Inapplicable.
27 Incorporated by reference to Exhibit
27 to the Company's Report on Form
8-K filed July 20, 1995.
99 Inapplicable.
