-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A/UqpyrlbBa4UX93fsfxNkRBcXdKg0X3RKq0ryUQwPXVCGIVr9v4xswkeD5vZ5OS RSMCLObQajvFTtPYtTlWog== 0000893220-00-000532.txt : 20000426 0000893220-00-000532.hdr.sgml : 20000426 ACCESSION NUMBER: 0000893220-00-000532 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000425 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000425 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADVANTA CORP CENTRAL INDEX KEY: 0000096638 STANDARD INDUSTRIAL CLASSIFICATION: PERSONAL CREDIT INSTITUTIONS [6141] IRS NUMBER: 231462070 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-14120 FILM NUMBER: 608393 BUSINESS ADDRESS: STREET 1: P.O. BOX 844 STREET 2: WELSH & MCKEAN ROADS CITY: SPRING HOUSE STATE: PA ZIP: 19477 BUSINESS PHONE: 2154445051 MAIL ADDRESS: STREET 1: C/O WELSH & MCKEAN ROADS STREET 2: P.O. BOX 844 CITY: SPRING HOUSE STATE: PA ZIP: 19477-0844 FORMER COMPANY: FORMER CONFORMED NAME: TSO FINANCIAL CORP DATE OF NAME CHANGE: 19880306 FORMER COMPANY: FORMER CONFORMED NAME: TEACHERS SERVICE ORGANIZATION INC DATE OF NAME CHANGE: 19850812 8-K 1 ADVANTA CORP 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): April 25, 2000 Advanta Corp. (Exact name of registrant as specified in its charter)
Delaware 0-14120 23-1462070 - ---------------------------- ---------------- ------------------ (State or other jurisdiction (Commission File (IRS Employer of incorporation) Number) Identification No.) Welsh and McKean Roads, P.O. Box 844, Spring House, PA 19477 (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 657-4000 2 Item 5. Other Events On April 25, 2000 Advanta Corp. (the "Company" or "Advanta") announced pro forma net operating income for the first quarter 2000 of $16.2 million, or $0.63 per share on a diluted basis for its Class A and Class B shares combined. This represents an increase of 59% over the net operating income of $10.2 million or $0.40 per share for the first quarter of 1999. These results reflect income for Advanta Mortgage that is essentially the same as a portfolio lender. Highlights this quarter include: - - Advanta Business Cards net income of $8.6 million, a 156% increase over the quarter ended March 31, 1999. - - Advanta Mortgage net income of $9.5 million, a 38.4% increase over the quarter ended March 31, 1999. - - Improved asset quality at Advanta Mortgage with over 30 day delinquencies falling to 8.04% from 8.63% at December 31, 1999. - - Continued improvements in asset quality at Advanta Business Cards with over 30 day delinquencies improving to 3.44% as compared to 3.70% at December 31, 1999. Net income for the quarter was $17.1 million or $0.67 per share on a diluted basis for Class A and Class B shares combined. These results include $10.9 million of pretax gains in connection with investments of Advanta Partners, the Company's private equity investment affiliate. Also impacting results was a reduction in the Company's retained interests in leasing securitizations of approximately $9.5 million which strengthened the balance sheet. Excluding these items, net income for the quarter was $16.2 million or $0.63 per share on a diluted basis for Class A and Class B shares combined. On a basis that is essentially the same as a portfolio lender, net income for Advanta Mortgage was $9.5 million, as compared to $6.9 million for the quarter ended March 31, 1999. This increase reflects higher yields on originations and an increase in subservicing revenues from growth in the subservicing portfolio. The weighted average yield of mortgage loans originated in the first quarter increased by 35 basis points over the fourth quarter of 1999. Advanta Mortgage's sub-serviced portfolio increased to $13.1 billion at the end of this quarter from $11.9 billion at the end of 1999. Net income for Advanta Business Cards was $8.6 million this quarter compared to $3.3 million for the first quarter of 1999. This increase resulted principally from growth in the number of accounts and receivables. Account originations increased approximately 58% this quarter as compared to the quarter ended December 31, 1999. Approximately 18% of accounts added this quarter were originated entirely online through Advanta's website (which provides instant, real time decisioning) as compared to 10% in the fourth quarter of 1999. Managed receivables for Advanta Business Cards at the end of the quarter were $1.2 billion. 3 Advanta generated $30.6 million of cash flow from operations, after considering key mortgage non-cash income and expense items and the cash impact of mortgage loan originations. Advanta ended the quarter with approximately $750 million in total liquidity after paying down $122 million of Medium Term Notes during the quarter. In addition, the Company had financed, with parent and bank funds, loan receivables on its books totaling $1.6 billion and had available approximately $1.1 billion in unused warehouse lines and Commercial Paper conduit facilities at March 31, 2000. Advanta management will hold a conference call today, April 25, 2000, at 9:00 am Eastern time. Investors can listen to the call live over the Internet through http://www.advanta.com or http://www.vcall.com. To listen to the live call, please go to the web site at least fifteen minutes early to register, download, and install any necessary audio software. For those unable to listen to the live broadcast, replays will be available shortly after the call on the Vcall site. Advanta (http://www.advanta.com) is a highly focused financial services company with over 2,800 employees, servicing over $25 billion of assets, including $12.5 billion in managed assets and over $13 billion in assets serviced for third parties. Advanta provides consumers and small businesses with targeted financial products and services, including non-conforming mortgages, business credit cards, equipment leases, insurance and deposit products. The Company is also one of the largest servicers of non-conforming mortgages for third parties in the country. Advanta has leveraged its first-class direct marketing and information based expertise to develop state-of-the-art data warehousing and statistical modeling tools that identify potential customers and new target markets. Advanta created one of the first automated underwriting and sales engines in the non-conforming mortgage industry. The Company also offers its customers and business partners a broad range of self-service financial solutions and other services on the Internet. Advanta was ranked one of the 500 Most Admired Companies in America in FORTUNE Magazine's most recent annual survey. This Current Report on Form 8-K contains forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. The most significant among these risks and uncertainties are: (1) the Company's managed net interest margin; (2) competitive pressures; (3) factors that affect the level of delinquencies and charge-offs, including a deterioration of general economic conditions; (4) the rate of prepayments; (5) interest rate fluctuations; (6) the level of expenses; (7) managed and sub-serviced receivables volume; (8) the timing of the securitizations of the Company's receivables; (9) the level of insurance policy renewals; (10) the effects of government regulation; (11) relationships with significant vendors, business partners and customers; (12) the amount and cost of financing available to the Company; and (13) the ratings on the debt of the Company and its subsidiaries. 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. 4 Form 8-K Advanta Corp. April 25, 2000 Item 7. Financial Statements and Exhibits. (c) Exhibits: The following exhibits are filed as part of this Report on Form 8-K. 99 Selected Summary Financial Data. 5 Form 8-K Advanta Corp. April 25, 2000 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of l934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Advanta Corp. By: /s/ Elizabeth H. Mai Elizabeth H. Mai, Senior Vice President, Secretary and General Counsel April 25, 2000 6 Form 8-K Advanta Corp. April 25, 2000 Index to Exhibits
Exhibit Number Per Item 60l of Regulation S-K Description of Document - -------------- ----------------------- 99 Selected Summary Financial Data
EX-99 2 SELECTED SUMMARY FINANCIAL DATA 1 Exhibit 99 ADVANTA CORP. SUPPLEMENTAL CONSOLIDATING INCOME STATEMENT (IN THOUSANDS)
THREE MONTHS ENDED MARCH 31, 2000 ------------------------------------------------------------------------------------ ADVANTA ADVANTA ADVANTA BUSINESS LEASING MORTGAGE CARDS SERVICES OTHER (a) TOTAL --------------- --------------- --------------- --------------- --------------- REVENUES: Interest income $ 47,732 $15,884 $ 4,039 $14,499 $ 82,154 Securitization income 26,476 13,244 (7,465)[b] 0 32,255 Servicing revenues 32,119 3,840 1,728 0 37,687 Other revenues, net 1,479 14,038 5,185 10,039 30,741 --------------- --------------- --------------- --------------- --------------- Total revenues 107,806 47,006 3,487 24,538 182,837 --------------- --------------- --------------- --------------- --------------- EXPENSES: Operating expenses 63,848 19,102 8,787 1,972 93,709 Interest expense 24,575 6,101 3,001 14,078 47,755 Provision for credit losses 2,123 7,620 1,656 0 11,399 Minority int. in inc. of consolidated sub 1,798 244 178 0 2,220 --------------- --------------- --------------- --------------- --------------- Total expenses 92,344 33,067 13,622 16,050 155,083 --------------- --------------- --------------- --------------- --------------- INCOME (LOSS) BEFORE INCOME TAXES 15,462 13,939 (10,135) 8,488 27,754 Income tax expense (benefit) 5,953 5,367 (3,902) 3,267 10,685 --------------- --------------- --------------- --------------- --------------- NET INCOME (LOSS) $ 9,509 $ 8,572 $ (6,233) $ 5,221 $ 17,069 =============== =============== =============== =============== ===============
(a) Other includes insurance operations and investment activities not attributable to other segments. (b) Leasing securitization income includes a $9,500 reduction in Advanta's retained interests in leasing securitizations. -more- 2 ADVANTA CORP. RECONCILIATION OF ADVANTA MORTGAGE TO PORTFOLIO LENDER EARNINGS FORMAT (IN THOUSANDS)
THREE MONTHS ENDED MARCH 31, 2000 -------------------------------------------------------------------------------------- ADVANTA ADVANTA MORTGAGE AS PRO FORMA MORTGAGE AS PRO FORMA PORTFOLIO REMAINING PRO FORMA REPORTED ADJUSTMENTS LENDER BUSINESSES [f] CONSOLIDATED ----------------- --------------- --------------- --------------- --------------- REVENUES: Interest income $ 47,732 $177,904 [a] $225,636 $34,422 $260,058 Securitization income 26,476 (26,476) [b] 0 15,279 15,279 Servicing revenues 32,119 (12,238) [c] 19,881 5,568 25,449 Other revenues, net 1,479 0 1,479 18,348 19,827 ----------------- --------------- --------------- --------------- --------------- Total revenues 107,806 139,190 246,996 73,617 320,613 ----------------- --------------- --------------- --------------- --------------- EXPENSES: Operating expenses 63,848 1,809 [d] 65,657 29,861 95,518 Interest expense 24,575 115,787 [a] 140,362 23,180 163,542 Provision for credit losses 2,123 21,594 [e] 23,717 9,276 32,993 Minority interest in income of consolidated subsidiary 1,798 0 1,798 422 2,220 ----------------- --------------- --------------- --------------- --------------- Total expenses 92,344 139,190 231,534 62,739 294,273 ----------------- --------------- --------------- --------------- --------------- INCOME BEFORE INCOME TAXES 15,462 0 15,462 10,878 26,340 Income tax expense 5,953 0 5,953 4,188 10,141 ----------------- --------------- --------------- --------------- --------------- NET INCOME $ 9,509 $ 0 $ 9,509 $ 6,690 $16,199 ================= =============== =============== =============== ===============
FOOTNOTES FOR PRO FORMA ADJUSTMENTS: [a] Represents the adjustment to interest income and interest expense as if the securitized mortgage loans were still owned by Advanta and remained on the balance sheet for the period presented. [b] Represents the reclassification of net gains recognized on the sale of mortgage loans for the period. [c] Represents the reclassification of servicing revenues on securitized mortgage loans for the period presented. [d] Represents the reclassification of securitization costs incurred by Advanta. [e] Represents the amount by which the provision for credit losses would have increased had the securitized mortgage loans remained on the balance sheet and the provision for credit losses on securitized receivables been equal to actual reported charge-offs. [f] Adjusted to exclude the pretax gain associated with Advanta Partners investments of $10,914, and a pretax reduction in Advanta's retained interests in leasing securitizations of $9,500. -more- 3 ADVANTA CORP. HIGHLIGHTS (IN THOUSANDS)
THREE MONTHS ENDED ----------------------------------------------------------------------------- PERCENT CHANGE MARCH 31, DECEMBER 31, MARCH 31, FROM ORIGINATIONS 2000 1999 1999 PRIOR QUARTER ---------------- ---------------- --------------- ------------------ Direct $380,040 $441,299 $403,204 -13.9% Broker 183,254 198,820 174,087 -7.8 Conduit 0 3,506 117,286 -100.0 Corp. Finance 1,454 960 16,773 51.5 Auto 0 0 5,103 0.0 ---------------- ---------------- --------------- ------------------ Total Advanta Mortgage loans $564,748 $644,585 $716,453 -12.4% Business cards $747,587 $609,078 $400,428 22.7% Leases 109,082 117,677 109,836 -7.3 SECURITIZATION/SALES VOLUME Advanta Mortgage $483,944 $163,542 $634,147 195.9% Business cards 157,067 35,942 25,000 337.0 Leases 107,253 105,300 95,574 1.9 ---------------- ---------------- --------------- ------------------ Total securitization/sales volume $748,264 $304,784 $754,721 145.5% AVERAGE MANAGED RECEIVABLES Mortgage loans $8,346,321 $8,261,925 $8,114,144 1.0% Business cards 1,120,635 974,025 822,852 15.1 Leases 805,404 766,871 663,874 5.0 Auto loans 77,445 93,189 198,321 -16.9 Other loans 20,752 17,643 17,820 17.6 ---------------- ---------------- --------------- ------------------ Total average managed receivables $10,370,557 $10,113,653 $9,817,011 2.5% Total average serviced receivables $22,877,022 $21,239,095 $18,397,098 7.7% ENDING MANAGED RECEIVABLES Mortgage loans $8,390,122 $8,299,685 $8,212,797 1.1% Business cards 1,226,210 1,040,114 832,086 17.9 Leases 821,258 795,643 700,383 3.2 Auto loans 74,652 83,851 185,621 -11.0 Other loans 19,521 21,930 17,093 -11.0 ---------------- ---------------- --------------- ------------------ Total managed receivables $10,531,763 $10,241,223 $ 9,947,980 2.8% Total serviced receivables $23,607,975 $22,142,890 $18,858,811 6.6% IO AND CMSR ROLLFORWARD Beginning balance $208,277 $245,551 $283,521 Retained IO on sales, net 18,663 3,701 32,769 Hedge impact (1,918) (201) (3,614) Write-down related to auto loans 0 0 (7,828) Interest income 20,346 14,030 15,902 Cash received (38,830) (44,365) (48,001) Additional reserves 0 (10,439) 0 Other, net 0 0 (873) ---------------- ---------------- --------------- Ending balance $206,538 $208,277 $271,876 ================ ================ ===============
-more- 4 ADVANTA CORP. HIGHLIGHTS (CONTINUED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED ------------------------------------------------------------------------------- PERCENT CHANGE MARCH 31, DECEMBER 31, MARCH 31, FROM 2000 1999 1999 PRIOR QUARTER ----------------- ----------------- ------------------ --------------- EARNINGS As a % of average managed receivables: Operating expenses 3.45% 3.30% 3.47% 4.5% Charge-offs 1.84 1.80 1.36 2.2 Efficiency ratio 60.81 60.35 72.35 0.8 Basic earnings per common share $ 0.68 $ 0.67 $ 0.25 1.9 Diluted earnings per common share $ 0.67 $ 0.66 $ 0.25 1.3 Return on average common equity 11.37% 11.45% 4.50% -0.7 COMMON STOCK DATA Weighted average common shares used to compute: Basic earnings per common share 24,785 24,611 23,087 0.7% Diluted earnings per common share 25,384 25,139 23,178 1.0 Ending shares outstanding 27,280 27,344 25,310 -0.2 Stock price: Class A High $ 21.875 $ 20.375 $ 15.188 7.4 Low 16.875 14.625 10.313 15.4 Closing 20.313 18.250 11.063 11.3 Class B High 15.500 $ 15.875 $ 12.313 -2.4 Low 11.500 10.438 7.750 10.2 Closing 14.484 14.063 8.938 3.0 Cash dividends declared Class A $ 0.063 $ 0.063 $ 0.063 0.0 Class B 0.076 0.076 0.076 0.0 Book value per common share $ 23.68 $ 23.14 $ 22.41 (a) 2.3
(a) Assumes conversion of the Class B Preferred Stock for periods prior to September 1999. -Statistical Supplement Available Upon Request- ###### -----END PRIVACY-ENHANCED MESSAGE-----