EX-99.1 2 a5317761ex991.txt ADVANTA CORP. EXHIBIT 99.1 Exhibit 99.1 Advanta Reports Stellar 2006 Results as Expected SPRING HOUSE, Pa.--(BUSINESS WIRE)--Jan. 25, 2007--Advanta Corp. (NASDAQ:ADVNB; ADVNA) today reported full year 2006 net income from continuing operations of $84.2 million or $2.86 per diluted share for Class A and Class B shares combined. This includes a $0.03 per share asset valuation gain associated with the Company's venture capital portfolio. These results are $0.03 per combined diluted share above the high end of the Company's most recent guidance range, including $0.01 per share of venture capital gain that was not anticipated in the guidance. "Our 2006 full year Business Cards earnings increased by over 50%, and our managed receivables grew by almost 39%; we added 56% more new customers, and our managed net credit loss rate dropped by 230 basis points to 3.41%. We had a great year! Most importantly we continued to strengthen and build on the foundation for the burgeoning results we expect to see going forward," said Dennis Alter, Chairman and CEO. Ending managed receivables grew to $5.2 billion at December 31, 2006, with full year new customers totaling approximately 371,000. Ending owned receivables grew 29% during the year to $1.1 billion, and the full year net credit loss rate on owned receivables decreased 218 basis points to 3.19%. 2006 customer transaction volume totaled $12.3 billion, a 26% increase over 2005. For the fourth quarter, Advanta reported net income of $18.2 million or $0.62 per combined diluted share, including a $0.01 per share asset valuation gain associated with the Company's venture capital portfolio. Conference Call Details Advanta management will hold a conference call with analysts and institutional investors today, January 25, at 9:00 a.m. Eastern Time to review fourth quarter and full year results for 2006. The call can be accessed by dialing 800-310-6649 and referring to pass code 4090185. 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 15 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 confirmation code 4090185. 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 the only credit card issuer (through Advanta Bank Corp.) exclusively focused on the small business credit card market. As one of the nation's largest issuers of business credit cards, Advanta is differentiated from other issuers by its size, experience in this market and commitment to developing meaningful product offerings and a high level of service tailored to the needs of small businesses. 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 materially from those projected. The most significant among these risks and uncertainties are: (1) the Company's managed net interest income including changes resulting from fluctuations in the volume of receivables and the range and timing of pricing offers to cardholders; (2) competitive pressures, including product development and pricing, among financial institutions; (3) political conditions, social conditions, monetary and fiscal policies and general economic and other environmental conditions that affect the level of new account originations, customer spending, delinquencies and charge-offs; (4) factors affecting fluctuations in the number of accounts or receivable balances, including the retention of cardholders after promotional pricing periods have expired; (5) interest rate fluctuations; (6) the level of expenses; (7) the timing of the securitizations of the Company's receivables; (8) the effects of government regulation, including restrictions and limitations imposed by banking laws, regulators and examinations; (9) effect of, and changes in, tax laws, rates, regulations and policies; (10) effect of legal and regulatory developments, including changes in bankruptcy laws and regulations and the ultimate resolution of the industry-related judicial proceedings relating to the legality of certain interchange rates; (11) relationships with customers, significant vendors and business partners; (12) difficulties or delays in the Company's ability to develop, acquire, produce, test and market products or services, including the ability and cost to obtain intellectual property rights or a failure to implement new products or services when anticipated; (13) the amount and cost of financing available to the Company; (14) the ratings on the debt of the Company and its subsidiaries; (15) the effects of changes in accounting policies or practices as may be required by changes in U.S. generally accepted accounting principles; (16) the impact of litigation, including judgments, settlements and actual or anticipated insurance recoveries for costs or judgments; (17) the proper design and operation of the Company's disclosure controls and procedures; and (18) the ability to attract and retain key personnel. 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. 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 (in thousands) Three Months Ended December 31, 2006 ---------------------------------------------------------------------- Advanta Business Cards Other(A) Total ---------- ---------- ---------- Interest income $ 37,839 $ 7,209 $ 45,048 Interest expense 14,066 8,161 22,227 ---------- ---------- ---------- Net interest income 23,773 (952) 22,821 Provision for credit losses 9,969 0 9,969 ---------- ---------- ---------- Net interest income after provision for credit losses 13,804 (952) 12,852 Noninterest revenues: Interchange income 54,925 0 54,925 Securitization income 25,442 0 25,442 Servicing revenues 17,938 0 17,938 Business credit card rewards (20,011) 0 (20,011) Other revenues, net 5,356 1,560 6,916 ---------- ---------- ---------- Total noninterest revenues 83,650 1,560 85,210 Operating expenses 68,361 144 68,505 ---------- ---------- ---------- Income before income taxes 29,093 464 29,557 Income tax expense 11,201 178 11,379 ---------- ---------- ---------- Net income $ 17,892 $ 286 $ 18,178 ========== ========== ========== Three Months Ended December 31, 2005 ---------------------------------------------------------------------- Advanta Business Cards Other(A) Total ---------- ---------- ---------- Interest income $ 36,018 $ 5,266 $ 41,284 Interest expense 9,453 6,529 15,982 ---------- ---------- ---------- Net interest income 26,565 (1,263) 25,302 Provision for credit losses 10,018 0 10,018 ---------- ---------- ---------- Net interest income after provision for credit losses 16,547 (1,263) 15,284 Noninterest revenues: Interchange income 45,528 0 45,528 Securitization income 16,792 0 16,792 Servicing revenues 12,876 0 12,876 Business credit card rewards (15,828) 0 (15,828) Other revenues, net 3,906 3,015 6,921 ---------- ---------- ---------- Total noninterest revenues 63,274 3,015 66,289 Operating expenses 58,252 1,220 59,472 ---------- ---------- ---------- Income before income taxes 21,569 532 22,101 Income tax expense 8,412 207 8,619 ---------- ---------- ---------- Income from continuing operations 13,157 325 13,482 Gain on discontinuance of mortgage and leasing businesses, net of tax 0 2,074 2,074 ---------- ---------- ---------- Net income $ 13,157 $ 2,399 $ 15,556 ========== ========== ========== (A) Other includes venture capital operations as well as investment and other activities not attributable to the Advanta Business Cards segment. ADVANTA SEGMENT INCOME STATEMENT (in thousands) Twelve Months Ended December 31, 2006 ---------------------------------------------------------------------- Advanta Business Cards Other(A) Total ---------- ---------- ---------- Interest income $ 143,738 $ 26,017 $ 169,755 Interest expense 46,233 29,077 75,310 ---------- ---------- ---------- Net interest income 97,505 (3,060) 94,445 Provision for credit losses 38,650 (50) 38,600 ---------- ---------- ---------- Net interest income after provision for credit losses 58,855 (3,010) 55,845 Noninterest revenues: Interchange income 203,370 0 203,370 Securitization income 114,938 0 114,938 Servicing revenues 63,726 0 63,726 Business credit card rewards (68,062) 0 (68,062) Other revenues, net 18,952 5,031 23,983 ---------- ---------- ---------- Total noninterest revenues 332,924 5,031 337,955 Operating expenses 256,192 620 256,812 ---------- ---------- ---------- Income before income taxes 135,587 1,401 136,988 Income tax expense 52,201 539 52,740 ---------- ---------- ---------- Income from continuing operations 83,386 862 84,248 Gain on discontinuance of mortgage and leasing businesses, net of tax 0 738 738 ---------- ---------- ---------- Net income $ 83,386 $ 1,600 $ 84,986 ========== ========== ========== Twelve Months Ended December 31, 2005 ---------------------------------------------------------------------- Advanta Business Cards Other(A) Total ---------- ---------- ---------- Interest income $ 121,697 $ 17,904 $ 139,601 Interest expense 36,027 21,559 57,586 ---------- ---------- ---------- Net interest income 85,670 (3,655) 82,015 Provision for credit losses 40,315 (18) 40,297 ---------- ---------- ---------- Net interest income after provision for credit losses 45,355 (3,637) 41,718 Noninterest revenues: Interchange income 164,853 0 164,853 Securitization income 109,051 0 109,051 Servicing revenues 51,079 0 51,079 Business credit card rewards (53,721) 0 (53,721) Gain on transfer of consumer credit card business 0 67,679 67,679 Other revenues, net 13,294 6,284 19,578 ---------- --------- ---------- Total noninterest revenues 284,556 73,963 358,519 Operating expenses 241,006 2,052 243,058 ---------- ---------- ---------- Income before income taxes 88,905 68,274 157,179 Income tax expense 34,673 5,817 40,490 ---------- ---------- ---------- Income from continuing operations 54,232 62,457 116,689 Loss, net, on discontinuance of mortgage and leasing businesses, net of tax 0 (6,260) (6,260) ---------- ---------- ---------- Net income $ 54,232 $ 56,197 $ 110,429 ========== ========== ========== (A) Other includes venture capital operations as well as investment and other activities not attributable to the Advanta Business Cards segment. ADVANTA HIGHLIGHTS (in thousands, except per share data) Three Months Ended Percent Change From ----------------------------- EARNINGS Dec. 31, Sept. 30, Dec. 31, Prior Prior 2006 2006 2005 Quarter Year ---------------------------------------------------------------------- Basic income from continuing operations per common share: Class A $ 0.63 $ 0.75 $ 0.48 (16.0)% 31.3% Class B 0.69 0.81 0.51 (14.8) 35.3 Combined (A) 0.67 0.79 0.50 (15.2) 34.0 Diluted income from continuing operations per common share: Class A 0.60 0.71 0.45 (15.5) 33.3 Class B 0.62 0.73 0.46 (15.1) 34.8 Combined (A) 0.62 0.73 0.46 (15.1) 34.8 Basic net income per common share: Class A 0.63 0.75 0.56 (16.0) 12.5 Class B 0.69 0.81 0.59 (14.8) 16.9 Combined (A) 0.67 0.79 0.58 (15.2) 15.5 Diluted net income per common share: Class A 0.60 0.71 0.52 (15.5) 15.4 Class B 0.62 0.73 0.53 (15.1) 17.0 Combined (A) 0.62 0.73 0.53 (15.1) 17.0 Return on average common equity 13.03 % 15.85 % 12.28 % (17.8) 6.1 COMMON STOCK DATA ---------------------------------------------------------------------- Weighted average common shares used to compute: Basic earnings per common share Class A 8,870 8,862 8,837 0.1 % 0.4% Class B 18,315 17,887 17,992 2.4 1.8 -------- ----------- -------- Total 27,185 26,749 26,829 1.6 1.3 Diluted earnings per common share Class A 8,870 8,862 8,837 0.1 0.4 Class B 20,626 20,167 20,535 2.3 0.4 -------- ----------- -------- Total 29,496 29,029 29,372 1.6 0.4 Ending shares outstanding: Class A 9,607 9,607 9,607 0.0 0.0 Class B 19,135 18,961 18,756 0.9 2.0 -------- ----------- -------- Total 28,742 28,568 28,363 0.6 1.3 Stock price: Class A High $ 42.63 $ 34.99 $ 31.30 21.8 36.2 Low 33.52 29.16 22.62 15.0 48.2 Closing 39.81 33.97 30.13 17.2 32.1 Class B High 46.71 38.25 33.06 22.1 41.3 Low 36.51 31.92 24.76 14.4 47.5 Closing 43.63 36.90 32.44 18.2 34.5 Cash dividends declared: Class A 0.2125 0.2125 0.1134 0.0 87.4 Class B 0.2550 0.2550 0.1361 0.0 87.4 Book value per common share 20.65 20.15 18.74 2.5 10.2 Twelve Months Ended --------------------- EARNINGS Dec. 31, Dec. 31, Percent 2006 2005 Change ---------------------------------------------------------------------- Basic income from continuing operations per common share: Class A $ 3.01 $ 4.34 (30.6)% Class B 3.18 4.47 (28.9) Combined (A) 3.12 4.43 (29.6) Diluted income from continuing operations per common share: Class A 2.82 3.99 (29.3) Class B 2.88 4.04 (28.7) Combined (A) 2.86 4.02 (28.9) Basic net income per common share: Class A 3.04 4.11 (26.0) Class B 3.21 4.23 (24.1) Combined (A) 3.15 4.19 (24.8) Diluted net income per common share: Class A 2.84 3.77 (24.7) Class B 2.91 3.82 (23.8) Combined (A) 2.89 3.81 (24.1) Return on average common equity 15.80% 23.06% (31.5) COMMON STOCK DATA ---------------------------------------------------------------------- Weighted average common shares used to compute: Basic earnings per common share Class A 8,858 8,825 0.4 % Class B 18,064 17,512 3.2 ---------- ---------- Total 26,922 26,337 2.2 Diluted earnings per common share Class A 8,858 8,825 0.4 Class B 20,530 20,160 1.8 ---------- ---------- Total 29,388 28,985 1.4 Ending shares outstanding: Class A Class B Total Stock price: Class A High $ 42.63 $ 31.30 36.2 Low 28.82 20.23 42.5 Closing 39.81 30.13 32.1 Class B High 46.71 33.06 41.3 Low 30.84 21.84 41.2 Closing 43.63 32.44 34.5 Cash dividends declared: Class A 0.7509 0.4347 72.7 Class B 0.9011 0.5217 72.7 Book value per common share (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 BUSINESS CREDIT CARD STATISTICS ($ in thousands) Percent Change Three Months Ended From ------------------------------------ Dec. 31, Sept. 30, Dec. 31, Prior Prior 2006 2006 2005 Quarter Year ----------------------------------------------------- New account originations 116,157 85,392 64,206 36.0 % 80.9 % Average number of active accounts (A) 786,224 724,705 621,966 8.5 26.4 Ending number of accounts 1,126,083 1,037,161 877,114 8.6 28.4 Transaction volume $3,482,032 $3,094,702 $2,693,908 12.5 29.3 Securitization volume increase excluding replenishment sales $ 620,000 $ 125,000 $ 100,000 396.0 520.0 Average receivables: Owned $1,193,101 $1,114,122 $1,011,684 7.1 17.9 Securitized 3,773,549 3,388,784 2,694,391 11.4 40.1 ------------ ----------- ----------- Managed (B) 4,966,650 4,502,906 3,706,075 10.3 34.0 Ending receivables: Owned $1,133,132 $1,198,550 $ 879,468 (5.5) 28.8 Securitized 4,073,128 3,449,366 2,880,401 18.1 41.4 ------------ ----------- ----------- Managed (B) 5,206,260 4,647,916 3,759,869 12.0 38.5 ---------------------------------------------------------------------- CREDIT QUALITY - OWNED ----------------- Receivables 30 days or more delinquent $ 26,053 $ 29,081 $ 23,595 Receivables 90 days or more delinquent 12,632 13,182 10,837 As a percentage of receivables: Receivables 30 days or more delinquent 2.30 % 2.43 % 2.68 % (5.3)% (14.2)% Receivables 90 days or more delinquent 1.11 1.10 1.23 0.9 (9.8) Net principal charge-offs: Amount $ 9,169 $ 9,002 $ 15,768 As a percentage of average receivables (annualized) 3.07 % 3.23 % 6.23 % (5.0) (50.7) CREDIT QUALITY - SECURITIZED ----------------- Receivables 30 days or more delinquent $ 108,159 $ 96,240 $ 87,610 Receivables 90 days or more delinquent 52,279 43,911 40,223 As a percentage of receivables: Receivables 30 days or more delinquent 2.66 % 2.79 % 3.04 % (4.7)% (12.5)% Receivables 90 days or more delinquent 1.28 1.27 1.40 0.8 (8.6) Net principal charge-offs: Amount $ 33,100 $ 29,399 $ 46,151 As a percentage of average receivables (annualized) 3.51 % 3.47 % 6.85 % 1.2 (48.8) CREDIT QUALITY - MANAGED (B) ----------------- Receivables 30 days or more delinquent $ 134,212 $ 125,321 $ 111,205 Receivables 90 days or more delinquent 64,911 57,093 51,060 As a percentage of receivables: Receivables 30 days or more delinquent 2.58 % 2.70 % 2.96 % (4.4)% (12.8)% Receivables 90 days or more delinquent 1.25 1.23 1.36 1.6 (8.1) Net principal charge-offs: Amount $ 42,269 $ 38,401 $ 61,919 As a percentage of average receivables (annualized) 3.40 % 3.41 % 6.68% (0.3) (49.1) Twelve Months Ended ------------------------- Dec. 31, Dec. 31, Percent 2006 2005 Change ----------------------------------- New account originations 370,564 237,005 56.4% Average number of active accounts (A) 713,302 598,839 19.1 Ending number of accounts Transaction volume $12,342,149 $9,830,979 25.5 Securitization volume increase excluding replenishment sales $ 1,185,000 $ 316,968 273.9 Average receivables: Owned $ 1,059,566 $ 835,093 26.9 Securitized 3,337,888 2,675,906 24.7 ------------- ---------- Managed (B) 4,397,454 3,510,999 25.2 Ending receivables: Owned Securitized Managed (B) ---------------------------------------------------------------------- CREDIT QUALITY - OWNED ----------------------------------- Receivables 30 days or more delinquent Receivables 90 days or more delinquent As a percentage of receivables: Receivables 30 days or more delinquent Receivables 90 days or more delinquent Net principal charge-offs: Amount $ 33,775 $ 44,865 As a percentage of average receivables (annualized) 3.19% 5.37% (40.6)% CREDIT QUALITY - SECURITIZED ----------------------------------- Receivables 30 days or more delinquent Receivables 90 days or more delinquent As a percentage of receivables: Receivables 30 days or more delinquent Receivables 90 days or more delinquent Net principal charge-offs: Amount $ 116,227 $ 155,618 As a percentage of average receivables (annualized) 3.48% 5.82% (40.2)% CREDIT QUALITY - MANAGED (B) ----------------------------------- Receivables 30 days or more delinquent Receivables 90 days or more delinquent As a percentage of receivables: Receivables 30 days or more delinquent Receivables 90 days or more delinquent Net principal charge-offs: Amount $ 150,002 $ 200,483 As a percentage of average receivables (annualized) 3.41% 5.71% (40.3)% (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. CONTACT: Advanta Corp. Amy B. Holderer Vice President, Investor Relations 215-444-5335 aholderer@advanta.com or David M. Goodman Director, Communications 215-444-5073 dgoodman@advanta.com