SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 16, 1997
________________________ADVANTA Corp.____________________________
(Exact name of registrant as specified in its charter)
_______Delaware__________ _____0-14120________ ______23-1462070__
(State or other jurisdic- (Commission File (IRS Employer
tion of incorporation or Number) Identification No.)
Organization)
Welsh and McKean Roads, P.O. Box 844, Spring House, PA
(Address of principal executive offices)
19477
(Zip Code)
Registrant's telephone number, including area code: (215) 657-4000
<PAGE>
5. Other Events.
On July 16, 1997 Advanta Corporation announced net income of $5.4
million and earnings per share of $0.12, returning the Company to
profitability after a one-quarter interruption in its previous eight
years of profitable growth. In the second quarter of 1996, the
Company registered net income of $45.1 million and earnings per share
of $1.00. For the first quarter of 1997, the Company reported a loss
of $19.8 million, or $0.43 per share.
For the second quarter of 1997, Advanta reported net revenues of
$216.1 million versus $182.5 million recorded in the first quarter
1997 and $189.6 million in the year-ago quarter.
In March of 1997 the Company announced that it commenced a thorough
and systematic review of its business strategy. As part of this
effort, the Company outlined a number of steps that it would pursue.
The steps the Company has taken to restore it to historical levels of
profitability include:
Repricing certain segments of the credit card portfolio: In
June the Company repriced roughly two-thirds of its customers. The
new rates better match customer risk profiles. The credit card yield
reported for the June quarter of 15.6% showed an approximately 130
basis point improvement over the yield for the quarter ended March
1997.
Improving the Company's collection process and more quickly
intervening with potentially troubled accounts: Since March the
Company has added approximately 200 individuals to its collections
effort. Additionally, the Company began to outsource certain
collections activities. As evidence of the strengthened collections
process, the credit card 30+ day delinquency rate declined from the
5.16% reported at the end of March to 4.95% in June.
Tightening underwriting standards: The Company incorporated
more stringent credit criteria both in new customer acquisitions
and existing account management activities.
Developing new marketing programs to retain high-credit-quality
cardholders and new products that offer customers additional value:
Several new products will be introduced into the marketplace during
the third and fourth quarters. New programs and enhancements for
current credit card customers are being offered during this Summer.
Highlights for the second quarter include the following items:
Managed net interest margin rose to 7.63% from the 7.05% recorded
in the first quarter and the 5.84% posted in the comparable
period of 1996. The contractual repricing of credit cards from
their introductory rate helped to expand the credit card yield.
The overall margin growth was dampened by the large cash position
which the Company chose to maintain.
<PAGE>
The consolidated managed charge-off and 30+ day delinquency rates
for the quarter ended June 30 were 5.54% and 5.35%, respectively.
The consolidated managed charge-off rate increased from the 5.26%
registered for the quarter ended March 31 and from the 2.91%
recorded in the comparable quarter of 1996.
The second quarter's managed credit card charge-off and 30+ day
delinquency rates were 7.24% and 4.95%, respectively. For the
quarter ended March 31, the charge- off rate on managed credit
cards was 6.61% and was 3.30% for the year-ago quarter. The
June 1997 30+ day delinquency rate declined from the 5.16% registered
at March 31. At June 30, 1996 this rate stood at 2.87%.
At the close of the second quarter, total managed receivables of
$16.3 billion posted a 5.7% increase from the $15.4 billion
reported last June. Managed credit card receivables ended June 30
at $11.2 billion, an 11.8% decrease from the $12.7 billion level
last June. As compared to the $12.2 billion at the close of March,
the managed credit card receivables balance declined 8.2%.
The Company now expects credit card receivables in the range of
$12 to $13 billion and total receivables of $18 to $19 billion
at year end 1997.
Advanta Personal Finance originated $915 million in new business
during the second quarter, triple the year ago level. This
record volume helped to increase the balance of managed assets to
$3.9 billion, up 88.0% over last June. In addition, the Company
services $7.5 billion on a third party contract basis, bringing
the total portfolio serviced to $11.4 billion.
Any statements released by Advanta that are forward looking are made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Investors are cautioned that forward-
looking statements involve risks and uncertainties which may affect
the Company's business and prospects. At present, significant risks
and uncertainties include: the Company's managed net interest
margin, which in turn is affected by the Company's success in
originating new credit card accounts, receivables volume and initial
pricing of new accounts, the impact of repricing existing accounts
and account attrition, the mix of account types and interest rate
fluctuations; the level of delinquencies, customer bankruptcies, and
charge-offs; and the amount and rate of growth in the Company's
expenses. Earnings may also be significantly affected by factors
that affect consumer debt, competitive pressures from other
providers of financial services, the effects of governmental
regulation, the amount and cost of financing available to the
Company and its subsidiaries, the difficulty or inability to
securitize the Company's receivables, and the impact of the ratings
on debt of the Company and its subsidiaries. Additional risks that
may affect future performance are detailed in the Company's filings
with the SEC.
<PAGE>
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
The following exhibit is filed as part of this Report on
Form 8-K:
27 Financial Data Schedules.
99 Selected summary financial data.
<PAGE>
Exhibit 99
ADVANTA AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
($ in millions, except per share data)
Three Months Ended % Change
June 30, 1997 versus
1997 1996 1996
OPERATING RESULTS
Net Revenues(A) $216.1 $189.6 14%
Provision for Losses $ 50.3 $ 27.7 82%
Operating Expenses $158.6 $127.4 24%
Net Income $ 5.4 $ 45.1 (88%)
Earnings Per Common Share $ 0.12 $ 1.00 (88%)
Average Shares (Millions) 45.7 45.2 1%
Return on Common Equity 2.1% 27.2% (92%)
Managed Net Interest Margin 7.63% 5.84% 31%
Six Months Ended % Change
June 30, 1997 versus
1997 1996 1996
OPERATING RESULTS
Net Revenues (A) $398.6 $377.4 6%
Provision for Losses $110.6 $ 42.7 159%
Operating Expenses $307.4 $237.9 29%
Net Income (Loss) ($14.4) $ 86.2 (117%)
Earnings (Loss) Per Common Share ($0.32) $ 1.91 (117%)
Average Shares (Millions) 46.0 45.1 2%
Return on Common Equity (4.7%) 26.5% (118%)
Managed Net Interest Margin 7.29% 6.03% 21%
(A) Excludes $33.8 million gain on sale of credit card receivables in
the second quarter of 1996.
<PAGE>
Exhibit 99
ADVANTA AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
($ in millions, except per share data)
% Change
June 1997
June 30, March 31, June 30, versus
1997 1997 1996 June 1996
FINANCIAL CONDITION
Managed Receivables*
Credit Cards $11,186 $12,189 $12,679 (12%)
Personal Finance(A) $ 3,934 $ 3,276 $ 2,093 88%
Business Loans(B) $ 1,090 $ 954 $ 610 79%
Other Loans $ 54 $ 32 $ 11 431%
Total Managed
Receivables $16,264 $16,451 $15,393 6%
Total Managed Assets $20,655 $20,160 $18,184 14%
Stockholders' Equity $ 838 $ 837 $ 755 11%
Book Value Per
Common Share $ 17.32 $ 17.38 $ 16.13 7%
Equity/Managed Assets 4.54% 4.65% 4.15% 9%
Reserves for Credit
Losses $ 116.9 $ 105.4 $ 70.9 65%
Customer Accounts 6,487,588 6,472,862 5,829,354 11%
CREDIT QUALITY
Managed Net Charge-off Rate
Credit Cards 7.24% 6.61% 3.30%
Personal Finance(A) 0.63% 0.60% 0.67%
Total Receivables 5.54% 5.26% 2.91%
Managed 30+ Day Delinquency Rate
Credit Cards 4.95% 5.16% 2.87%
Personal Finance(A) 6.36% 6.35% 5.31%
Total Receivables 5.35% 5.49% 3.36%
(A) Includes Mortgages and Auto Loans.
(B) Includes Leases and Business Cards.
* Managed figures combine both owned and securitized receivables.
<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 thereunto duly authorized.
ADVANTA Corp.
Date: July 16, 1997 By: /s/ Elizabeth H. Mai
Elizabeth H. Mai, Senior
Vice President & General
Counsel
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