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): January 21, 1997
Advanta Corp.
(Exact name of registrant as specified in its charter)
Delaware 0-14120 23-1462070
(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation or organization) Number) Identification No.)
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 January 21, 1997 Advanta Corporation announced earnings for both
the fourth quarter and full year 1996. For the fourth quarter of 1996,
Advanta reported earnings per share of $1.00 and net income of
$45.2 million, increases of 18% and 20%, respectively, over
fourth quarter 1995. For the full year, earnings per share rose
to $3.89 and net income was $175.7 million, up 22% and 29%,
respectively, over 1995 results. At December 31, 1996, the
Company's portfolio of managed receivables increased 33%, or $4.1
billion to $16.3 billion, over the $12.2 billion recorded at year-
end 1995.
Highlights included the following items:
Total managed credit cards grew 27% or $2.7 billion in 1996
to reach $12.7 billion at year-end. The Company added 340,000
new credit card accounts during the fourth quarter, raising the
total to 5.7 million. This represented a 17% advance over the
number of accounts reported at year-end 1995.
Expansion of mortgage and personal finance businesses as
demonstrated by a year-over-year 53% or $956 million growth in
receivables to $2.8 billion. Additionally, Advanta Mortgage
services $3.7 billion of mortgages for third parties, a year-over-
year increase of nearly 500%.
Growth of business services managed receivables by $446 million
or 118%, led by the rapid expansion of the business card.
Leveraging technology and investing for the future resulted
in an operating expense ratio of 3.07% for the fourth quarter
1996. This ratio for the comparable quarter 1995 was 2.93%.
Included in the operating expense ratio is spending on new
technology, research and talent to support future growth and
opportunities.
Return on common equity for the fourth quarter 1996 was 23.7%,
versus 25.5% for the comparable quarter of the prior year.
For the full year 1996, return on common equity totalled 25.3%,
compared with 26.2% for 1995.
As previously disclosed, the Company adopted a new charge-off
methodology relating to credit card bankruptcies in the third
quarter 1996. As anticipated, that change had an impact in the
fourth quarter 1996 similar to the amount in the third quarter.
The consolidated managed charge-off rate increased to 3.9%
in fourth quarter 1996, up from 2.3% for same quarter 1995 and
the 3.2% posted in the third quarter. The charge-off rate on
managed credit cards was 4.6% for the fourth quarter 1996,
compared to 2.6% in 1995 and the 3.7% recorded in the third
quarter.
The consolidated 30+ day delinquency rate rose to 5.4% at
December 31, above the 3.3% reported for the prior year's end and
the 4.2% reported for the third quarter. The managed credit card
30+ day delinquency rate was 5.0%, above the 2.6% of the year ago
period and the 3.9% reported in the third quarter. 1996 credit
quality figures reflect the adoption of the new bankruptcy charge-
off methodology.
The managed net interest margin for the fourth quarter 1996
was 6.89%, up from the 5.88% in the previous year's fourth
quarter and the 6.19% reported for the third quarter. At year-
end, 34% of the managed credit card portfolio consisted of
receivables in their introductory rate period; these accounts
will contractually reprice upward over the course of the next
three quarters.
<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>
ADVANTA AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
($ in millions, except per share data)
Three Months Ended % Change
December 31, 1996 versus
1996 1995 1995
OPERATING RESULTS
Net Revenues $240.9 $185.4 30%
Provision for Losses $ 29.9 $ 25.2 19%
Operating Expenses $143.7 $102.4 40%
Net Income(1) $ 45.2 $ 37.6 20%
Earnings per Common Share(1) $ 1.00 $ .85 18%
Average Shares 45.2 44.3 2%
Return on Common Equity 23.7% 25.5% (7%)
Managed Net Interest Margin 6.89 5.88 17%
Year Ended % Change
December 31, 1996 versus
1996 1995 1995
OPERATING RESULTS
Net Revenues(2) $851.0 $615.9 38%
Provision for Losses $ 96.9 $ 53.3 82%
Operating Expenses $523.0 $350.7 49%
Net Income(1) $175.7 $136.7 29%
Earnings per Common Share(1) $ 3.89 $ 3.20 22%
Average Shares 45.1 42.7 6%
Return on Common Equity 25.3% 26.2% (3%)
Managed Net Interest Margin 6.32 5.87 8%
(1) 1996 earnings per share and net income are reported net of the impact
of the capital securities transaction.
(2) Full year 1996 amount excludes a $33.8 million gain on the sale of
credit card relationships.
<PAGE>
ADVANTA AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
($ in millions, except per share data)
% Change
Dec.1996
Dec. 31, Sept. 30, Dec. 31, versus
1996 1996 1995 Dec. 1995
FINANCIAL CONDITION
Managed Receivables*
Credit Cards $12,691 $12,711 $ 10,031 27%
Personal Finance Loans(A) $ 2,754 $ 2,346 $ 1,797 53%
Business Loans(B) $ 823 $ 725 $ 378 118%
Other Loans $ 21 $ 15 $ 9 125%
Total Managed Receivables $16,289 $15,797 $ 12,215 33%
Total Managed Assets $19,217 $18,357 $ 13,977 38%
Stockholders' Equity $ 852 $ 798 $ 673 27%
Book Value Per
Common Share $ 18.06 $ 17.14 $ 14.35 26%
Equity/Managed Assets(C) 4.95% 4.35% 4.81% 3%
Reserve for Credit Losses $ 89.2 $ 77.6 $ 53.5 67%
Customer Accounts 5,984,488 5,854,627 5,031,484 19%
CREDIT QUALITY
Managed Net Charge-off Rate
For the Quarter ended -
Credit Cards(D) 4.6% 3.7% 2.6%
Personal Finance Loans(A) 0.7% 0.7% 0.8%
Business Loans(B) 2.6% 2.1% 2.0%
Total Receivables(E) 3.9% 3.2% 2.3%
Managed 30+ Day Delinquency Rate
Credit Cards(D) 5.0% 3.9% 2.6%
Personal Finance Loans(A) 7.1% 5.4% 5.9%
Business Loans(B) 7.3% 6.7% 9.3%
Total Receivables(E) 5.4% 4.2% 3.3%
(A) Effective December 31, 1996 includes Mortgages and Auto Loans.
Prior periods of 1996 have been restated.
(B) Includes Leases and Business Cards beginning in 1996.
(C) Equity includes capital securities and stockholders' equity.
(D) Fourth quarter 1996 figures reflect the adoption of a new charge-off
methodology. Without this change, managed credit card charge-off and
delinquency rates for the fourth quarter 1996 would have been 5.1% and
4.6%, respectively.
(E) Fourth quarter 1996 figures reflect the adoption of a new charge-off
methodology. Without this change, total managed charge-off and
delinquency rates for the fourth quarter 1996 would have been 4.3% and
5.3%, respectively.
* 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: January 22, 1997 By: /s/ Gene S. Schneyer
Gene S. Schneyer, Vice President,
Secretary and General Counsel
<PAGE>
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