Magazine article American Banker

Advanta's Chargeoffs Down, Receivables Up

Magazine article American Banker

Advanta's Chargeoffs Down, Receivables Up

Article excerpt

Advanta Corp. reported a 40% jump in third-quarter net income, to $11.9 million, or 38 cents a share.

The Spring House, Pa., issuer of small-business credit cards said Tuesday that managed receivables rose 10% from a year earlier, to $3.2 billion.

Also, its chargeoff rate dropped by 179 basis points, to 6.48%.

"This was another strong quarter for asset-quality performance," Dennis Alter, Advanta's chairman and chief executive, said during a conference call Tuesday.

Delinquencies of over 30 days dropped 173 basis points, to 4.42%, and those of over 90 days fell 72 basis points, to 2.13%. The two rates have dropped each quarter this year from a year earlier and from the previous quarter, Mr. Alter said.

Owned business card receivables rose 33%, to $710 million.

"We are seeing the benefits from our strategies of the past few years," said Bill Rosoff, Advanta's president. "Business cards are doing well; card earnings matched our revised earnings projections. We are expecting a good fourth quarter."

The pending settlement of longstanding litigation with Bank of America Corp. is a factor in Advanta's projections. In June the Charlotte banking company agreed to return $63.8 million to Advanta and give it $125 million of disputed tax deductions.

The dispute arose after FleetBoston Financial Corp. bought Advanta's consumer credit card portfolio in 1998. Fleet -- which B of A bought in April -- sued Advanta for failure to complete certain post-closing adjustments. …

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